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PROFIT SHARING IN 
THE UNITED STATES 



BY 
BORIS EMMET 



A DISSERTATION 
Submitted to the Board of University Studies of The Johns 
Hopkins University in Conformity with the Require- 
ments for the Degree of Doctor of Philosophy 
1917 



O 



WASHINGTON, D. C 
1917 



U. S, DEPARTMENT OF LABOR 
BUREAU OF LABOR STATISTICS 

ROYAL MEEKER, Commissioner 



BULLETIN OF THE UNITED STATES) (WHOLE ^AQ 

BUREAU OF LABOR STATISTICS; ' ' ' { NUMBER LXjO 

MISCELLANEOUS SERIES: No. 13 

PROFIT SHARING IN 
THE UNITED STATES 

V \(\\ \ BY BORIS EMME T 




Vv 



DECEMBER, 1916 



WASHINGTON 

GOVERNMENT PRINTING OFFICE 

1917 



ADDITIONAL COPIES 

OF THIS PUBLICATION MAY BE PROCURED FROM 

THE SUPERINTENDENT OF DOCUMENTS 

GOVERNMENT PRINTING OFFICE 

WASHINGTON, D. C. 

AT 

20 CENTS PER COPY 
A 



Lit 

4 



CONTENTS. 



Page. 

Introduction . , '. 5-11 

Object of the study 5, 6 

Scope of the study 6, 7 

Methods used in the study 7 

Classification of profit-sharing plans in operation in the United States. ... 8, 9 
Extent of application of the profit-sharing principles in the United States. 9-11 

Profit-sharing plans 11-59 

Descriptive and statistical summary . . 11-20 

The determination of the profit-sharing fund 12, 13 

Method of apportioning divisible profits between capital and labor. . . 13, 14 

Conditions of eligibility 14, 15 

Basis for computing individual shares 15 

Conditions of forfeiture 15, 16 

Disposition of forfeitures 16 

Shares of employees laid off or sick 16 

Form of payment 16, 17 

Years in which the plans were established 17 

Location of profit-sharing establishments 17, 18 

Industry or business of profit-sharing establishments 18 

Size of profit-sharing establishments 18, 19 

Extent of participation 19 

Benefits accruing to employees .' , . 19 

Cost of plans to employers 19, 20 

Occupations of participating employees 20 

Detailed tables 20-24 

Analysis of working of 12 typical profit-sharing plans 25-59 

Limited profit-sharing plans: .- 59-84 

Descriptive and statistical summary of a selected group 59-64 

The determination of the profit-sharing fund 59, 60 

Conditions of eligibility. . . . , 60 

Basis for computing individual shares 61 

Conditions of forfeiture 61 

Disposition of forfeitures and form of payment 61, 62 

Years in which the limited plans were established 62 

Location of limited profit-sharing establishments 62 

Industry or business of limited profit-sharing establishments • 63 

Size of limited profit-sharing establishments 63 

Extent of participation 63 

Benefits accruing to employees 63, 64 

Cost of plans to employers 64 

Occupations of participating employees 64 

Detailed tables 65, 66 

Analysis of working of 5 typical limited profit-sharing plans 66-84 

3 



4 CONTENTS. 

Page. 
Bonus plans commonly known as profit sharing 85-166 

Plan No. 1 86-94 

History of the plan 86-87 

Rules governing operation of plan 87-92 

Results of the working of the plan . . 92-94 

Plan No. 2 94-122 

The basic wage or salary 94, 95 

Participation in the ' ' profits " 96, 97 

Determination of eligibility for participation. 97-106 

Extent of actual participation 106-113 

Temporary disqualifications from participation 109-113 

Disposition of forfeitures 113 

Benefits accruing to employees as shown by their daily earnings . . 113-115 

Cost of the plan and its benefits to the company .... 115-117 

Changes in economic and social conditions attributable to the plan. 117-122 

Plan No. 3 122-129 

General nature of plan 122, 123 

Distribution of building and loan association stock 124 

Distribution of cash bonuses 124, 125 

Distribution of common stock 125, 126 

Benefits of the plan to the company 126-129 

Stock subscription plans 129-157 

Descriptive and statistical summary of a selected group of stock-sub- 
scription plans . 129-135 

Analysis of working of 4 typical plans 136-157 

Cash bonus plans based upon length of service 157-161 

General nature of plans 157-159 

Analysis of working of a selected group of cash bonus plans 159-161 

Miscellaneous plans 161-166 

A so-called cooperative wage system 161 

A plan based on price of product 162 

Bonus plan of sugar plantations of Hawaii 162-164 

Another so-called cooperative wage system 164-166 

Discontinued plans 166 -168 

Extent to which objects sought by establishment of profit-sharing plans have 
been realized 169-171 

Improvement of relations between employers and employees 169, 170 

Increased permanency of working force 170, 171 

Increased efficiency 171 



BULLETIN OF THE 
U. S. BUREAU OF LABOR STATISTICS. 

WHOLE NO. 208. WASHINGTON. DECEMBER, 1916. 

PROFIT SHARING IN THE UNITED STATES. 

BY BORIS EMMET. 

INTRODUCTION. 

The recognition of the desirability of a distribution of the profits 
of an enterprise so as to give to all the employees concerned with 
their creation a fair share is by no means of recent origin. Various 
reformers, some students of industrial problems, and often employers, 
have from time to time addressed themselves to a consideration of 
this problem with varying degrees of enthusiasm and zeal. Profit 
sharing, at times, has actually been advocated as the one and only 
method for the permanent solution of the so-called labor problem. 

Although most of the profit-sharing theories have been put into 
operation, the appearance and disappearance of profit-sharing schemes 
have been so irregular and infrequent that one may not appropri- 
ately speak of a profit-sharing movement. Profit sharing, in so far 
as it does exist in the United States at the present time, appears as 
a component part of a larger and more significant phenomenon in 
our industrial life, to wit, the tendency on the part of employers to 
create conditions that would mitigate the frequent and often violent 
disputes between themselves and their employees, thus fostering the 
development of a larger spirit of harmony and cooperation, and result- 
ing, incidentally, in greater efficiency and larger gains. 

OBJECT OF THE STUDY. 

The object of this study is to furnish as complete and detailed 
a picture as possible of the present status of profit sharing in the 
United States, presenting descriptively and statistically the following 
facts: (1) Extent of the application of the principle in American 
trade and industry; (2) nature or character of the existing plans 
with particular reference to (a) factors determining profits to be dis- 
tributed and (b) conditions under which profits are paid to employees; 
(3) proportion of the total employed who participate; (4) occupa- 
tions or t}^pes of employment of participating employees; (5) benefits 
accruing to participating employees; (6) cost of plans to the em- 
ployers; and (7) results secured through workings of the plans with 
special reference to factors tending to improve relations between em- 
ployer and employee and to increase the efficiency and stability of the 
working force. 



6 BULLETIN OP THE BUREAU OP LABOR STATISTICS. 

Although this study endeavors to throw some light on the causes 
of the .discontinuance of some of the profit-sharing plans known to 
have been m existence, it is in no sense historical, inasmuch as it 
does not concern itself in detail with the nature or character of the 
discontinued plans. 

SCOPE OF THE STUDY. 

In the course of this investigation all of the profit-sharing plans 
known to be in operation in the United States at the present time 
were carefully examined and analyzed. In addition to these, various 
other plans, popularly termed profit sharing, were studied The 
latter, m the majority of instances, bear no direct relation to the 
profits of the enterprises in which they are in vogue, the divisible 
moneys depending almost wholly upon factors not at all in the nature 
of profits; as, for example, the length of service or wages or salaries 
or both; wages or salaries and ownership of certain amounts of stock 
or of a savings account; general profitableness of the business and 
the skill of specific classes of employees coming under the plan- and 
in some of the so-called stock subscription plans, upon the subscrip- 
tion for certain amounts of stock, the so-called profits under such 
Plans accruing either by reason of the fact that the stock is offered 
to the employees at less than market price or through a special bonus 
per share for a limited number of years, from two to five usuallv 
paid to subscribing employees who retain ownership of the subscribed 
or paid for stock, or both. 

The common feature of all of the plans described in this report is 
the understanding among all concerned that the shares in the profit 
or the bonuses paid to the employees are separate and distinct from 
the employees' regular earnings, subject to change and withdraw^ 

%X^Jff£Z2zr d with the «■"*-« «* j* 

staring firms, who, tor some r^on or S Thes0 / U,ts w f ( > 1 started by employees of one of the profit- 
taining that the VnU^Zl^l^^^T^ZS^T' ^ J""* ^ 
employment respecting wages, appiicahto to all employee SVSSSSSi Itat Zlmnt C0BtraCt ,° f 

such conditions, had no legal ri^ht to dkmmimr. >L ", ■% bpki \ mc ciass > mat tfa e employer, under 

to some and denying then to Others The72t hn T^ f ° UPS ° f em P l0 ^ ***** Profits 

to the effect that profit-sharin. moneys ar ZZl^T"' T*™* *" conteiltioils of the defendant 
the sole right of determinTng^he coSon, ZZr TT?,™ ^^ ° f *" empl ° yer ' who therefo ™ has 
of profits were obtained ^S^^Z^^^tf^ ^ ^ ^ furthe ™e, if shares 
through a civil suit. rauc ^nt manner the moneys thus received may be recovered by the firm 

JitS2i2fe i^ssr 7 ' r t reguiations ° f the united stat - Tr -^ ^^ 

sharing expenditure^ no t^^^ofSd^,^"??^^^'^ 1 ^^"^ 
expense. Such monevs are taxed '.^^f^ " 11 ^ 11 ^ 1 ^^ cost of an establishment to be treated as an 

^oZo h Z^Z^2t:^l:7 mW l^r ° tPr0f,t -*«-*• "*t of an employee to the 
in favor of the company. OT-w-.uo, amr.166 N. Y.,530)-was decided against the employeeand 



PROFIT SHARING IN THE UNITED STATES. 7 

Except in a casual way, this report does not concern itself with 
plans under which a part of the divisible profits are set aside as a 
common fund for purposes of the general welfare of the employees, 
such as, for instance, the development of recreation activities, im- 
provement in the health of employees, or for the payment of sick 
benefits, old-age pensions, etc. 

The report, furthermore, omits altogether the consideration of any 
plans under which the bonuses paid depend chiefly upon increases in 
individual efficiency as shown either in the output of work or in the 
amount of sales made, or upon savings individually effected in the 
cost of production or in the normal expenses of operation. Whatever 
the ultimate value of such plans may be, their nature is such that 
they can not properly be included among plans involving the appli- 
cation of the profit-sharing principle, even in the broadest sense of 

the term. 

METHODS USED IN THE STUDY. 

In the collection of the information upon which the results pre- 
sented in this report are based, personal visits were made to each 
of the establishments that were reported as having profit-sharing or 
stock-subscription plans in operation for the benefit of their employees. 
The general nature of the plan, its object, and results achieved were 
discussed in each instance at great length with persons in direct charge; 
whenever possible, the originator of the plan was interviewed. 

All the statistical results herein shown, particularly those indicating 
the proportions of participants of the total employed, benefits ac- 
cruing to the employees, cost of the plan to the employer, and the 
occupations of the participants, are based upon data secured from 
original records of the respective firms. Furthermore, descriptive 
texts of specific plans distributed by the different companies and 
said to present the essential features of their plans, were carefully 
examined for the purpose of checking them with the actual facts as 
found upon the examination of the actual working of their respective 
plans. 

As the principal aim of the study was to present a complete account 
of the present status of profit sharing, properly speaking, plans other 
than those properly so termed were introduced into this report either 
because they were associated in the public mind with the principle of 
profit sharing, i. e., the actual distribution of definite proportions of 
the net profits, or because their introduction seemed to afford the 
best means of indicating clearly the real nature of profit sharing, 
as distinguished from ordinary bonus plans under which the so-called 
divisible amounts bear no immediate relation to the profits of the 
business. 



8 BULLETIN OF THE BUREAU OF. LABOR STATISTICS. 

CLASSIFICATION OF PROFIT-SHARING PLANS IN OPERATION IN THE 

UNITED STATES. 

Relatively few of the plans adopted by American employers for the 
purpose of giving their employees some remuneration in addition to 
their regular earnings can properly be classified as profit sharing 
as defined by the International Cooperative Congress. 1 

The following classification, based upon a close scrutiny of the 
detailed features of most of the plans in operation in the United 
States, was formulated and used throughout this report for conven- 
ience and clearness: 

I. Profit sharing — Essential features: 

1. Amount to be distributed varies with and depends upon 

the net profits of the enterprise or upon the amount of 
dividends paid to stockholders. 

2. Proportion of profits to be distributed is definitely deter- 

mined in advance. 

3. Benefits of the plan extended to at least one-third of the 

total employed, and including employees in occupations 
other than executive or clerical. 

4. Method of determining individual shares is known, at least 

in a general way, to the participating employees. 

II. Limited profit sharing — Essential features: 

1. Same as 1 in profit sharing. 

2. Same as 2 in profit sharing. 

3. Benefits of the plan limited to less than one-third of the 

total employed, and excluding employees other than 
executive or clerical. 

1 The terra "profit sharing," strictly speaking, was clearly defined by the International Cooperative Con- 
gress, held in Paris, France, 1S89. According to this definition profit sharing involves "an agreement freely 
entered into, by which the employees receive a share, fixed in advance, of the profits." 

In formulating this definition, the congress defined the term "agreement" as covering not only agreements 
binding in law, but as including also cases where the agreement is only a moral obligation, provided it is 
honorably carried out. 

As to the meaning of the term "profits" in the definition of the congress, it was stated that profits should 
be understood as constituting "the actual net balance or gain realized by the financial operations of the 
undertaking in relation to which the scheme exists." 

A "share" is stated by the same congress to be "a sum paid to the employee out of the profits." The 
amount of the share, it is further stated, "must be dependent upon the amount of the profits." 

Another feature of profit sharing that received the careful attention of the congress was the provision, 
unanimously adopted, that "che share received by the employee shall be fixed in advance." It is not 
necessary that the employee shall know all the details of the basis upon which the amount of his share 
will depend. It is essential, however, that the share to be given to the employee shall not be indeterminate, 
that is, it must not be a share which an employer fixes, at the end of some period, at his absolute discretion, 
as distinguished from a prearranged basis. 

The relative proportion of the total working force of a specific concern that must share in the profits in 
order to establish real profit-sharing conditions was stated by the same congress to be "not less than 75 
per cent." 

It is to be observed, furthermore, that the money received by an employee under any profit-sharing 
plan is to be received by him strictly as an employee for services rendered; the fact that an employee holds 
shares of stock or any other pecuniary interest in the business which employs him does not, in itself, con- 
stitute a case of profit sharing. (Bulletin de la Participation aux Benefices, Paris, Tome XIX, 1897, pp. 
220-222, cited by D. F. Sehloss, Methods of Industrial Remuneration, London, 1898, Ch. XVII.) 



PROFIT SHAKING IN THE UNITED STATES. 9 

III. Bonus plans, popularly known as profit sharing, under which the 
divisible fund does not depend upon or vary with the net profits of 
the enterprise, but upon any one of the following factors : 

1. Price for which commodity manufactured is disposed of — 

the so-called sliding-scale wage. 

2. Gross receipts or gross profits — a variant of the sliding 

scale. 

3. The estimated probable profits of the business. 

4. Wages or salaries earned and length of service. 

5. Length of service and thrift, as shown by the participant's 

ownership of some stock of the company, or mainte- 
nance of a savings account. 

6. Savings of the prospective participants, as shown by a sub- 

scription or ownership of a specified amount of stock of 
the employing company or savings accounts. 

7. Amount of savings collectively effected in production or 

operation. 
The major part of the subject matter of this report thus falls into 
three main parts, as follows: (1) Profit sharing in the strict sense of 
the term; (2) limited profit sharing; and (3) bonus plans popularly 
known as profit sharing. 

EXTENT OF THE APPLICATION OF THE PROFIT-SHARING PRINCIPLE IN 

THE UNITED STATES. 

Profit sharing, properly speaking, i. e., as confined to plans under 
which distributions of specified proportions of the net profits of the 
enterprise are made to at least one-third of the total employed, does 
not appear to have reached any considerable proportions^ the United 
States. The number of such plans known to be in operation at the 
present time does not exceed 60. l 

The table following presents a complete list of establishments hav- 
ing profit-sharing plans in operation, giving location, nature of indus- 
try or business, and years of establishment of the plans. 

i Mr. Aneurin Williams, honorary secretary of the Labor Copartnership Association of Great Britain, in 
his volume entitled "Copartnership and Profit Sharing," 1913, Henry Holt & Co., New York, Ch. VII, 
p. 146, gives as the reason for the slow progress of profit sharing in the United States the fact that "the 
material development of the country has been too rapid, the increase in the production of wealth too 
great, and the openings for men of ability, even without capital, too tempting, for many of the most active 
minds to concern themselves much with the improvements in industrial relations, and the system of 
sharing wealth." 






10 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

ESTABLISHMENTS WITH PROFIT-SHARING PLANS IN OPERATION IN 1916. 



Name of firm. 



City and State. 



Industry or business. 



Year 
plan 

was 
estab- 
lished. 



American Light & Traction Co , 
American Manufacturing Con- 
cern. 
Baker Manufacturing Co 



New York. N. Y. 
Falconer, N. Y... 



Ballard & Ballard Co , 

Ballinger & Perrot , 

Bartley,R. A , 

Benoit System 

Blood, J. B.,Co 

Boston Consolidated Gas Co.. 

Bourne Mills , 

Burritt,A. W , 

Cabot, Samuel , 

Carolina Savings Bank 

Chatfield Milling & Grain Co. 



Cleveland Twist & Drill Co. 

Davis, W. B 

Eastman Kodak Co 



Edison Electric Illuminating 

Co. 

Elliman, D. L.,&Co 

Empire Trust Co 

Farr Alpaca Co 

Garfield Savings Bank 

Graves, H. B. ; &Co 

Guardian Savings & Trust Co . . 
Harris Trust & Savings Bank. . 

Hathaway, C. F.,& Sons 

Heebner & Sons 

Hollenberg Music Co 

Ivey, J. B.,&Co 

Krauter, C. H 

Kutztown Foundry & Machine 

Co. 

Lever Bros. (Ltd.) * 

Liberty Trust Co 

Maxwell, A. L. , Co 

Milmore Corporation, The 

Miner-Hillard Milling Co 



Minneapolis Bedding Co 

Nelson, N. O., Manufacturing 

CO. 

New Haven Gas Light Co 

Newport Daily News 

Noves,Chas. F.,Co 

Parks, G.M., Co 

Patton Paint Co , 

Peninsular Paper Co 

Plymouth Cordage Co 

Record Auto Supply & Service 

Co. 

Sears, Roebuck & Co 

Simmons, R. F.,Co 

Simplex Wire & Cable Co 



Spencer Wire Co 

Stambaugh- Thomson Co 

Stevens, Samuel 

Stern, Bernard & Son . DO 

Title Guarantee & Trust Co. . . . 

Tyler, W. S., Co 

Underwood Typewriter Co., Inc, 
Union Savings Bank & Trust Co. 

United Electric & Water Co 

Vitagraph-Lubin-Selig-Essanay 

Co. (Inc.). 
Ward Baking Co 



Evansville, Wis. . 

Louisville, Ky . . . 
Philadelphia, Pa. 

Toledo, Ohio 

Bangor, Me 

Lynn, Mass 

Boston, Mass 

Fall River, Mass. 
Bridgeport, Conn . 

Boston, Mass 

Charleston, S. C. . 
Bay City, Mich.. 



Cleveland, Ohio. 
do 

Rochester, N. Y . 



Brooklyn, N. Y. 



New York, N. Y... 
do 

Holyoke, Mass 

Cleveland, Ohio 

Rochester, N. Y... 

Cleveland, Ohio 

Chicago, 111 

Cambridge, Mass. . . 

Lansdale, Pa 

Little Rock, Ark. . . 

Charlotte, N. C 

Youngstown, Ohio. 
Kutztown, Pa 



Cambridge, Mass. , 

Boston, Mass 

Lawrence ville, 111. 
South Bend, Ind. . 
Wilkes-Barre, Pa. 



Minneapolis, Minn. 
St. Louis, Mo 



New Haven, Conn. 

Newport, R. I 

New York, N. Y... 
Fitchburg, Mass . . . 

Milwaukee, Wis 

Ypsilanti, Mich 

Plymouth, Mass . . . 
Washington, D. C, 



Chicago, 111 

Attleboro, Mass. 
Boston, Mass 



Worcester, Mass 

Youngstown, Ohio. 
Columbus, Ohio . . . 

Milwaukee, Wis 

New York, N. Y... 

Cleveland, Ohio 

New York, N. Y... 
Cincinnati, Ohio. . . 

Hartford, Conn 

New York, N. Y... 



.do. 



Public utility 

Manufacturing wood novelties, letter 
files, toys, desks. 

Manufacturing windmills and gaso- 
line engines. 

Manufacturing— Flour milling 

Architects and building contractors. . . 

Mercantile 

do 

...do 

Public utility 

Manufacturing cotton cloth , 

Manufacturing— Lumber mill 

Manufacturing chemist 

Banking 

Manufacturing— Flour millers, grain 
dealers, etc. 

Manufacturing drills, etc 

Mercantile 

Manufacturing photographic appli- 
ances and supplies. 

Public utility 



Real estate brokers , 

Banking 

Manufacturing cotton cloth 

Banking 

Mercantile 

Banking 

do - 

Wholesale baking 

Manufacturing agricultural machinery. 

Mercantile 

do 

do 

Manufacturing— Foundry and ma- 
chine works. 

Manufacturing — Soap 

Banking 

Mercantile 

Manufacturing chemists 

Manufacturing— Milling, flour, meal, 
grits, etc. 

Manufacturing beds and bedding 

Manufacturing plumbers' and steam 
fitters' supplies. 

Public utility 

Newspaper publishing 

Real estate brokers 

Contractors and builders 

Manufacturing paints 

Manufacturing cover papers 

Manufacturing cordage 

Mercantile 



.do. 



Manufacturing jewelry 

Manufacturing insulating wires and 
cables. 

Manufacturing wire 

Mercantile 

...do 

Manufacturing— Flour milling 

Banking 

Manufacturing mining screens 

Manufacturing typewriters 

Banking 

Public utility 

Mercantile—Distributors of moving- 
picture films. 

Bakers 



1899 
1915 

1899 

1886 
1911 
1904 
1914 
1909 
1906 
1889 
1900 
1887 
1897 
1906 

1915 
1914 
1911 

1910 

1915 
1914 
1914 
1915 
1901 
1913 
1915 
1912 
1912 
1909 
1909 
1906 
1914 

1909 
1910 
1915 
1915 
1906 

1915 

1886 

1907 
1901 
1911 
1915 
1910 
1914 
1913 
1916 

1916 
1902 
1901 

1915 
1912 
1912 
1913 
1911 
1914 
1916 
1901 
1916 
1915 

1913 






1 This is the American branch of Lever Bros. (Ltd.), London, England, and its profit-sharing plan is a 
part of the profit-sharing plan of that firm. 



PROFIT SHARING IN THE UNITED STATES. 11 

/ L . 

The number of establishments that share some proportion of their 
profits with a few of their more important employees (limited profit 
sharing) greatly exceeds the number of establishments sharing profits 
with a considerable proportion of their employees (profit sharing). 
On account of the relatively small proportion of the employees 
affected by the limited profit-sharing plans, as shown on page 63 of 
this report, it was not deemed advisable to endeavor to compile a 
complete fist of such establishments. The number of bonus plans 
popularly known as profit sharing, particularly those involving stock 
subscriptions or the payment of percentage bonuses on earnings, 
based upon the length of service, is large. In view of the fact, how- 
ever, that such plans do not represent profit sharing, properly speak- 
ing, it was thought best to limit the discussion of them to an inten- 
sive study of a few selected representative groups of such plans. 

PROFIT-SHARING PLANS. 

DESCRIPTIVE AND STATISTICAL SUMMARY. 

This section of the report deals with profit-sharing plans in the 
strict sense of the word as denned in the introductory part of this 
report. The nature of the plans here described and analyzed approxi- 
mates very nearly the definition of profit sharing formulated by the 
International Cooperative Congress referred to in the footnote on 
page 8. 

In the formal announcements made regarding the establishment of 
most of the plans included in this class, specific reference is usually to 
be found to the fact that the arrangement is voluntary on the part of 
the employer, that the management in the application of the profit- 
sharing principle still reserves to itself the absolute right to discharge 
or lay off, as well as to disqualif y undeserving employees from further 
participation in the benefits of the plan. In one instance only, by 
reason of the contractual nature of the plan, may employees legally 
claim shares in the profits on the basis of the conditions specified in 
the agreement signed. 

The matter of the employees' right to participate in the divisible 
profits is somewhat more elaborately specified under plans in which 
individual shares are paid in stock and where therefore the principle 
of labor copartnership becomes incidental to the operation of the 
plan. Under such plans, more than under any of the others, the 
rights . of the participating employees are carefully formulated in 
writing and published for the guidance of both parties. 



12 BULLETIN OF THE BUKEAU OF LABOE STATISTICS. 

THE DETERMINATION OF THE PROFIT-SHARING FUND. 

In about three-fourths of the plans the amount available for 
distribution depends upon and varies with the net profits of the 
business. By net profits, in a great majority of instances, is 
meant the residuum of profits after all so-called legitimate ex- 
penses, including depreciation and what is assumed to be a mod- 
erate return on capital, have been paid, the theory being that interest 
on capital is a charge similar in nature to wages to be met out of the 
gross receipts. In general two distinct methods are followed in 
determining the amount of divisible profits under the profit-sharing 
plans herein discussed. Briefly, these methods are as follows: 

(1) Specific proportion of the net profits or of the amount paid out 
in dividends to stockholders. — The specific proportion of net profits 
that becomes available for distribution varies greatly with the differ- 
ent plans. Its range of variation is from 2 per cent (the lowest) to 
100 per cent (the highest), as is the case in the plan described in 
detail on pages 37 to 44 of this report. As in many instances the spe- 
cific proportion of profits to be distributed is not made public, it is 
rather difficult to state exactly the average proportion of profits that 
becomes available for distribution under most of the plans. It can 
be stated, however, with a fair degree of accuracy that within the 
range of variation just mentioned, the average for all of the plans 
studied would be about 10 per cent. In plans under which the 
divisible amount is dependent upon the amount paid out in divi- 
dends to the stockholders the range of variation is from one-tenth to 
one-third. 

In one instance all of the net profit of the business over and above 
what is assumed to be a fair rate of return on the capital invested is 
distributed among the employees eligible to participation and the 
firm on the basis of total earnings of employees on the one hand and 
total interest on the capital invested on the other. In another instance 
(one of the oldest plans) capital receives what is presumed to be a 
fair return on the investment, the surplus of profit over and above 
this return reverting to a general surplus fund out of which, in 
amounts determined at the end of each year by the management, 
the divisible profits are drawn for distribution in equal proportions 
among the participating employees and consumers, the former shar- 
ing upon the basis of their earnings and the latter according to the 
gross profits on their purchases. 1 

(2) Rate of dividend on earnings of employees equal in whole or in 
part to the rate of dividend paid on capital. — In the majority of plans 
of this kind the rate of dividend paid on the earnings of employees 
varies from one-half to three-fourths of the rate of dividend paid to 
the stockholders. 

1 A detailed description of the workings of this plan will be found on pp. 45 to 50. 






PEOFIT SHAKING IX THE UNITED STATES. 13 



The principal distinction between the different methods for the 
determination of the divisible fund above described is as follows: 
While in plans under which the divisible fund is dependent upon 
the net profits of the enterprise, the presence of profits at the end 
of the business period necessarily involves a distribution to the par- 
ticipating employees, such a distribution may not always take place 
under plans wherein the divisible fund depends upon dividends de- 
clared. For, even with the presence of large profits, the management 
may deem it more desirable to utilize them for purposes other than 
the payment of dividends, namely, to extend or enlarge the sphere 
of its business, in improving its physical properties, or, as it often 
happens, in creating surplus or emergency funds. 

METHOD OF APPORTIONING DIVISIBLE PROFITS BETWEEN CAPITAL AND LABOR. 

Generally speaking, the method of apportioning the divisible profits 
between capital and labor is determined at the outset by the em- 
ployer, who in most instances announces that a certain fixed per- 
centage of the profits, determined in a specified manner, will be 
distributed at the end of the business year among employees eligible 
to participate. 

Very often, however, plans merely state that the divisible profits 
will be distributed between capital and labor in proportion as the 
total pay roll is to the total capital invested, it being assumed that 
these two factors — total capital invested and total wages — are similar 
in nature, inasmuch as the former measures the interest that capital 
has and the latter the interest of labor in the undertaking. Aside 
from the fact that theoretically these two factors are not at all simi- 
lar — interest on capital corresponding more nearly, if at all, to wages — 
the above-mentioned method of distribution usually results in a dis- 
tribution of the profit-sharing fund in the ratio of about 3 to 1, to 
capital and labor, respectively. For this reason the benefits accruing 
to employees, even under the most liberal profit-sharing plans, are 
not very large. 

As opposed to the above-described basis of distribution of profits 
is the underlying principle guiding the distribution of profits under 
plan No. 5, described in detail on pages 37 to 44. It is the opinion of 
the management of the establishment in which this plan is in 
operation, that the factor in production that most nearly re- 
sembles wages is not the total capital but the interest on the 
same. "The employer," states the general manager of this firm, 
"invests his capital and labor its energy. The first gets his re- 
turn in the shape of interest on the investment — the legitimate per 
cent of profit, in our case 6 — the second gets his return in the form 
of daily or monthly wages. These two factors — interest on capital and 
wages — must be paid out of the gross receipts of the undertaking. The 



14 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

remainder of the gross profits after allowing all the other legitimate 
expenses constitutes the net earnings of the business, created jointly 
by capital and labor, to be distributed in proportion to the relative 
interest in the business of each of the two partners, namely, amount 
of interest on capital and wages. " 

The following example based upon actual facts relating to the 
capital invested, wages, interest, etc., of this company will illustrate 
the difference in the results obtained under the two methods dis- 
cussed, namely, the distribution of the divisible profits according to 
(a) the ratio of total capital to wages (method 1) and (b) the ratio of 
interest on capital to wages (method 2) . 

Assuming that the total capital invested in the undertaking during 
a specific year is $500,000, that it is understood that the fair interest 
on the same is 6 per cent, that the amount paid out in wages is 
$100,000, and that the amount of available divisible profits is $120,000, 
let us distribute the latter amount among the two factors — capital 
and labor — on the two bases indicated above and termed method 1 
and method 2. 

Method 1 . — Basis: Ratio of total capital to wages. 

Share of capital equals, under this method: 
120,000X500,000 
500,000 + 100,000 " * iUU > uuu - 

Share of labor then would be equal to : 
' 120>000X 100,000 _ 

500,000 + 100,000 ^ u ' uuu - 

Method 2. — Basis: Ratio of interest on capital to wages. 

As, at 6 per cent, interest on capital will amount to $30,000, the 
equations will be as follows : 

Share of capital equals, under this method: 

120,000X30,000 

100,000 + 30,000 " ^ ' ,0yZ# 

Share of labor then would equal: 

120,000X100,000 
100,000 + 30,000 -$ 92 > 308 - 

The difference in the two methods explains the unusually high 
profit-sharing dividends on wages paid under the profit-sharing plan 
described in detail on pages 37 to 44. 

CONDITIONS OF ELIGIBILITY. 

In only one of the profit-sharing plans studied are all employees with- 
out exception allowed to participate in the distributed profits. In one 
case also the benefits of the plan are confined to employees signi- 



PROFIT SHARING IN THE UNITED STATES. 15 

fying their intention to participate proportionately in the possible 
losses of the business. In nine-tenths of the plans, however, the 
main condition of eligibility for participation is the permanency of 
affiliation with the employing company, as shown by a specific length 
of continuous service. This minimum of continuous service varies 
from three months to three years, the length of time required in 
more than one-half of all the plans being one year or less. Thus all 
the plans, with one exception, exclude from participation the so-called 
shifting part of their working organization, confining the benefits to 
their more or less permanent employees. 

In about one-eighth of the plans in operation employees to partici- 
pate must file a written application especially provided for that pur- 
pose. The nature of such applications, in most instances, is simply 
a perfunctory statement signed by the employee to the effect that 
he promises to do faithful work and be loyal to the company. In one 
instance employees contractually obligate themselves "to share in the 
possible losses of the year's business in proportion to their earnings, 
but not to exceed 10 per cent. Under the latter plan 10 per cent of 
the weekly earnings of each of the participating employees is retained 
by the company until the end of the distribution period, when the 
amounts thus retained are returned to the employees together with 
their share of profits for the year. 

BASIS FOR COMPUTING INDIVIDUAL SHARES. 

In the great majority of the plans studied the basis for computing 
individual shares is relatively simple; namely, the amount of earn- 
ings of the participants. The individual shares in such instances are 
determined by dividing the employees' part in the divisible fund 
by the aggregate of wages of the participants in order to obtain 
what is usually called the profit-sharing dividend, and then multi- 
plying this dividend by the respective earnings of each of the par- 
ticipants. In all of the plans the rules and regulations governing 
the distribution of the profits are relatively simple, the employees 
thus being enabled to know in advance the conditions of eligibility 
for participation, the basis upon which individual shares will be 
determined, and the circumstances under which shares in the profits 
may be forfeited. 

CONDITIONS OF FORFEITURE. 

In all of the plans except one, discharge and leaving employment 
act automatically as causes for forfeiting the share of profits for the 
current year. The one plan provides specifically that only a dis- 
charge for cause results in forfeiture; other discharges, being more 
in the nature of permanent lay offs on account of lack of work, do 
not deprive employees of their proportionate share of the profits. 
Some of the plans under which shares of profits are paid in stock or in 
the form of savings accounts penalize those leaving employment more 
severely than those who are discharged, it being specified in these 



16 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

few instances that employees leaving forfeit some part of the share 
of the profits of the previous year — usually from one-fifth to one- 
third — in addition to the share of the current year's profit. 

The provision that death shall be a cause of forfeiture occurs only 
in about one-half of the plans; in the other plans it is specified that 
the pro rata share of the deceased employee shall be paid to his family 
or dependents. 

DISPOSITION OF FORFEITURES. 

In profit-sharing plans under which the shares of profits constitute 
some proportion of the dividends paid on capital the amounts of for- 
feited shares are usually retained by the employer. In other plans 
the amounts forfeited do not revert to the -employer, but are appor- 
tioned among the participating employees. The reason for the 
difference in the disposition of forfeitures under the two groups of 
plans is explained by the fact that under the former plans the total 
amount to be distributed varies with the aggregate earnings of the 
participants, while under the latter the amount to be distributed is a 
definite proportion of the profits, which is fixed in advance. 

SHARES OF EMPLOYEES LAID OFF OR SICK. 

The majority of plans in operation specifically provide that em- 
ployees temporarily laid off by the management, but otherwise 
eligible and ready to return to work upon call, be not barred from 
participation. Their shares in such instances are based on their 
actual earnings. In one-third of the plans, it appears, cases of lay 
off are treated "each upon its own merits." 

The same treatment as that of employees laid off is accorded to 
those taken sick, provided the sickness does not extend "over an 
unreasonably long period" — usually not over six months. Under one 
plan only is it specifically stated that sickness of an employee carries 
with it a forfeiture of his share of the profits. In this instance, how- 
ever, the company maintains a special fund for the benefit of its sick 
employees. 

FORM OF PAYMENT. 

The forms of payment of individual shares of profits under 42 of the 
plans examined were found to be as follows : 

Under 32, or over three-fourths of those reporting, the shares in 
profits were paid fully in cash. Five reported as paying in "part 
stock or savings account or common fund and part cash." Of these 
the following proportions were paid in cash: One, 99 per cent; one, 90 
per cent; one, 85 per cent; one, 80 per cent; and one, 10 per cent. 
Under two plans the shares of profits were credited to a common fund, 
which was utilized to create a pension reserve which was to be made 
up in equal parts of the shares of profits and contributions by the 
employees. In two cases the profits were found to be credited to 
savings accounts, and in one case the payment was all in stock. 




PROFIT SHARING IN THE UNITED STATES. 



17 



In plans under which the larger proportion of the individual 
shares are paid in stock numerous provisions exist to prevent em- 
ployees from disposing of their profit-sharing stock in a hasty or 
improvident manner, it being the idea of the employers that a 
profit-sharing plan can not successfully be operated unless the par- 
ticipants retain a pecuniary interest in the business. In two of the 
plans employees are specifically enjoined from disposing of their 
stock because the management looks upon the scheme as a means for 
creating for the benefit of the employees an annuity to provide 
against old age and general disability. 

YEARS IN WHICH THE PLANS WERE ESTABLISHED. 

In the following table the profit-sharing plans in operation in the 
United States are classified by year of establishment : 

Table 1.— YEARS IN WHICH PROFIT-SHARING PLANS WERE ESTABLISHED. 



Y T ear. 


Number 
of plans. 


l T ear. 


Number 
of plans. 


Y"ear. 


Number 
of plans. 


188G 


2 

1 
1 
1 

2 

1 
4 


! 1902 


1 
1 

4 1 
1 
4 
3 

4 ; 


1912. 
1913. 
1914. 
1915. 
1916. 




4 


1887 


1904 




4 


1889 


1906 




7 


1897 


1907 




11 


1899 


1909 




4 


1900 


1910 


Total 




1901 


1911 


60 







From the above table it may be seen that the profit-sharing plans 
in operation in the United States at the present time are of compar- 
atively recent origin, only seven of them, or about one-ninth, having 
been established prior to 1900. Twenty-nine, or almost one-half, have 
been established since 1911. Slightly under one-third of the plans 
have been in operation 10 years or longer. Over two-thirds of them 
have been in operation less than 10 years. Of the latter group, 21, or 
more than one-third of all, were put into effect in 1914, 1915, and 1916. 

LOCATION OF PROFIT-SHARING ESTABLISHMENTS. 

The geographical location of the establishments having profit- 
sharing plans in operation at the present time may be seen from the 
following table: 

Table 2.— LOCATION OF PROFIT-SHARING ESTABLISHMENTS. 



State. 


Number 
of estab- 
lish- 
ments. 


State. 


Number 
of estab- 
lish- 
ments. 


State. 


Number 
of estab- 
lish- 
ments. 


Arkansas 


1 
3 
1 

3 
1 
1 
1 


Michigan 

Minnesota 


13 
2 
1 

1 ! 
12 

1 
10 


Pennsylvania 

Rhode Island 


4 


Connecticut 


1 


District of Columbia. . 


South Carolina 

"Wisconsin 


1 


Illinois 


Missouri 


3 


Indiana 


New York 


Total 


. 


Kentucky 


North Carolina 

Ohio 


60 


Maine 













56831°— Bull. 208—17- 



18 



BULLETIN OF THE BUREAU OF LABOR STATISTICS. 



The interesting feature of the above-presented geographical distri- 
bution of the profit-sharing establishments is the fact that over six- 
tenths of all these establishments are located in three States — Massa- 
chusetts, New York, and Ohio — and that more than half of them 
are in the North Atlantic States. 



INDUSTRY OR BUSINESS OF PROFIT-SHARING ESTABLISHMENTS. 

The nature of the industry or business in which establishments 
having profit-sharing plans in operation are engaged is shown in the 
table presented below: 

Table 3.— INDUSTRY OR BUSINESS OF ESTABLISHMENTS HAVING PROFIT-SHARING 

PLANS. 



Industry or business. 



Manufacturing 

Mercantile 

Banking 

Public utilities 

Building and contracting 



Number 
of estab- 
lish- 
ments. 



26 
14 

8 
5 
2 



Industry or business 



Real-estate brokers 

Wholesale baking 

Newspaper publishing 

Total 



Number 
of estab- 
lish- 
ments. 



CO 



The above table shows that the largest single group of profit-shar- 
ing plans, 25, or 45 per cent of all, were in operation in establishments 
engaged in manufacturing, 12, or 21 per cent, in mercantile institu- 
tions, 8, or 14 per cent, in banking houses, and 4, or 7 per cent, in 
organizations engaged in public service. 

SIZE OF PROFIT-SHARING ESTABLISHMENTS. 

The size of 38 profit-sharing establishments, as indicated by the 
average numbers employed during a representative distribution 
period, is shown in the following table: 

Table 4.— NUMBER AND PER CENT OF PROFIT-SHARING ESTABLISHMENTS HAVING 
EACH CLASSIFIED NUMBER OF EMPLOYEES. 



Classified number of employees. 


Establishments. 


Number. 


Per cent. 


Under 100 '. 


13 
14 
1 
5 
4 
1 


34.2 
36.8 

2.6 
13.2 
10.5 

2.6 


100 and under 300 


300 and under 500 


500 and under 1,000 


1,000 and under 3,000 


5,000 and under 10,000 


Total 


38 


100.0 





PROFIT SHARING IN THE UNITED STATES. 



19 



Of the 38 establishments having profit-sharing plans in operation 
71 per cent employed less than 300 people. The proportion of them 
that had 1,000 employees or more was very small — 13.1 per cent. 



EXTENT OF PARTICIPATION. 



Of the 37 establishments reporting the proportion of the total 
employed who participated in the distributed profits 19, or 51.4 per 
cent, reported 80 per cent and over participating; 13, or 35.1 per 
cent, reported 60 and under 80 per cent participating; 4, or 10.8 per 
cent, 40 and under 60 per cent; and only 1 reported 20 and under 40 
per cent of all the employees sharing in the profits. 

BENEFITS ACCRUING TO EMPLOYEES. 

The benefits accruing to the participating employees as a result of 
the operation of the profit-sharing plans during one representative 
distribution period, in terms of a percentage of the regular earnings of 
participants, are shown in the following table: 

Table 5.— PER CENT OF EARNINGS PAID AS DIVIDENDS IN 34 PROFIT-SHARING 

ESTABLISHMENTS. 



Classified per cent of earnings paid as 
dividends. 



Under 2 

2 and under 4 

4 and under 6 

6 and under 8 

8 and under 10 , j 

10 and under 15 

15 and under 20 



Number 
of estab- 
lish- 
ments. 



Classified per cent of earnings paid as 
dividends. 



20 and under 30 
30 and under 40 
40 and under 50 
50 and over... . 

Total 



Number 
of estab- 
lish- 
ments. 



34 



Under almost one-third of the plans the profit-sharing dividend on 
the regular earnings of the participants was less than 6 per cent. 
Slightly over one-third of the establishments paid dividends varying 
from 6 to 10 per cent. The remaining third of the establishments 
paid dividends of 10 per cent or more. Of the latter, 5 establish- 
ments paid profit-sharing dividends of 20 per cent or more. 

COST OF PLANS TO EMPLOYERS. 

In view of the fact that in the great majority of the establishments 
not all of the employees were eligible for participation, the cost of 
the plans to the employers, in per cent of the total labor pay rolls 
was considerably smaller than the relative benefits accruing to their 
employees as shown above. The table following shows the cost of 
the profit-sharing plans to the employers for one representative dis- 
tribution period. 



20 



BULLETIN OF THE BUREAU OF LABOR STATISTICS. 



Table 6.— COST OP PROFIT-SHARING PLANS TO 34 EMPLOYERS, IN PER CENT OF 

TOTAL PAY ROLLS. 



Classified per cent of pay rolls paid as 
dividends. 


Number 
of estab- 
lishments. 


Classified per cent of pay rolls paid as 
dividends. 


Number 
of estab- 
lishments. 


Under 1 s. 


1 
4 
7 
7 
7 
1 


10 and under 15 


1 


1 and under 2 


15 and under 20 


1 


2 and under 4 .- 


20 and over 




4 and under 6 


Total 




6 and under 8 


34 


8 and under 10 











The cost in more than one-half of all the establishments was less 
than 6 per cent of their respective annual pay rolls. In 7 of the 
establishments, or 20.6 per cent, the plans necessitated an additional 
expense of from 6 to 8 per cent of the total pay rolls. The proportion 
of plans in which the additional expense attributable to the operation 
of the profit-sharing plans amounted to 20 per cent or more was 
14.7 per cent. 

OCCUPATIONS OF PARTICIPATING EMPLOYEES. 

The following table shows the occupations or types of employment 
of the participating employees of 34 establishments at the end of one 
distribution period: 

TABLE 7.— NUMBER AND PER CENT OF PARTICIPATING EMPLOYEES IN EACH OCCUPA- 
TION GROUP. 




Occupation group. 


Participating 
employees. 


Number. 


Per cent. 


Executive 

Clerical 


1,326 

783 

266 

11,553 


9.5 
5.6 
1.9 

82.9 


Sales . . 


All others 


Total 


13,928 


100.0 





The table shows that 82.9 per cent of all the beneficiaries belonged 
to the classification of "all others," that is, were engaged in occupa- 
tions other than executive, clerical, or sales. Only 9.5 per cent of 
the participants were holding executive positions. 



DETAILED TABLES. 



The two tables which follow show in detail, for each establishment, 
the principal part of the data shown in summary form in the tables 
preceding. 



PROFIT SHARING IN THE UNITED STATES. 



21 



TABLE 8.— NUMBER OF EMPLOYEES, PROPORTION PARTICIPATING IN PROFITS, 
DIVIDENDS TO EMPLOYEES, AND COST OF PROFIT-SHARING PLANS TO EMPLOY- 
ERS, IN 38 ESTABLISHMENTS HAVING PROFIT-SHARING PLANS. 



Dividend 
period ending- 



Dec. 31, 1914. 

Dee. 31, 1910. 
Dec. 31,1911. 
Dec. 31,1912. 
Dec. 31,1913. 
Dec. 31,1914. 
Dec. 31, 1915. 

Jan. 1,1914.. 
Jan. 1,1915.. 



Dec. 31, 1915. 
Feb. 11, 1916. 

Mar. 31, 1914. 

June 30, 1911 . 
June 30, 1912. 
June 30, 1913. 
June 30, 1914. 
June 30, 1915. 

1907 to 1909... 

1910 

1911 

1912 

1913 

1914 - 

1915 



Dec. 31,1915. 



1896 to 1904. 

1905 

1906 

1907 

1908 

1909 

1910 

1911 

1912 

1913 

1915 2 



Aver- 
age 
num- 
ber of 
em- 
ploy- 
ees. 



Employees 
participat- 
ing in 
profits. . 



Dec. 31. 1912. 
Dec. 31, 1913. 
Dec. 31, 1914. 
Dec. 31, 1915. 



2,575 

95 
97 
100 
98 
96 
85 

131 
141 

100 



274 

0) 
C 1 ) 
0) 
0) 
31 

0) 
111 

1.53 
173 
180 

178 
168 

172 

(') 

0) 

( \> 

(0 
0) 
0) 
(») 

p) 

0) 
651 
731 

509 
455 
475 
541 



Dec. 31, 1903. 
Dec. 31, 1904. 
Dec. 31, 1905. 
Dec. 31, 1906. 
Dec. 31, 1907. 
Dec. 31, 1908. 
Dec. 31, 1909. 
Dec. 31, 1910. 
Dec. 31, 1911. 
Dec. 31, 1912. 
Dec. 31, 1913. 
Dee. 31, 1914. 



Num- 
ber. 



2,265 

56 
60 
60 
64 
64 
68 

130 
140 

100 

51 

217 

0) 
C 1 ) 
0) 

i l ) 

29 

0) 
111 

153 
173 
180 
178 
168 

146 

0) 

353 

384 

395 

438 

476 

518 

530 

534 

451 

541 



Per 

cent 

of 

total. 



88.0 

58.9 
61.9 
60.0 
65.3 
66.7 
80.0 

99.2 
99.3 

100.0 

68.0 

79.2 

C 1 ) 
C 1 ) 

0) 

0) 

93.5 

0) 
100.0 
100.0 
100.0 
100.0 
100.0 
100.0 

84.9 

0) 
0) 
P) 

P) 

P) 
P) 

P) 
P) 
P) 
67.7 
74.0 



Apr. 30, 1915 



298 58.5 
297 65.3 
322 f 67.8 
308 j 56.9 

71.7 

66.7 
79.5 
75.0 
63.0 
82.4 
86.3 
73.1 
82.1 
87.0 
88.7 
45 I 83.3 



31 31 1100.0 



46 


33 


48 


32 


44 


35 


48 


36 


54 


34 


51 


42 


51 


44 


52 


38 


56 


46 


54 


47 


53 


47 


54 


45 



Total 
pay roll. 



SI, 550, 000 

59.165 
. 59^ 747 
64,478 
68,477 
65, 832 
59, 539 

210,000 
230,000 



63,523 

32, 928 

29,892 
32,683 
38,293 
14, 527 
16, 521 

P) ~" r: 

92,482 
115,866 
135, 625 
145,850 
152,250 
132,962 

129,530 

P) 
P) 
P) 
P) 
P) 
P) 

( l ) 
p) 

P) 
P) 
P) 

350,371 
354, 935 
338,360 
373,995 

18, 224 
19,333 
19,453 
19,946 
20,723 
21, 249 
21, 175 
21,410 
23,970 
24,110 
24, 497 
27,833 



Pay roll of par- 
ticipants. 



Amount. 



$1, 250, 000 



P) 


P) 


P) 


p) 


P) 


P) 


P) 


P) 


P) 


P) 


P) 


P) 



175,000 
185,000 



Per 

cent 
of 

total 
pay 
roll. 



80.6 



83.3 
80.4 



63,523 100.0 

P) ^ P) 
26,050 : 79.1 



18, 360 
20,566 
22, 087 
25, 675 
27,950 

V 1 ) * 

92,482 
115,866 
135,625 
145,850 
152.250 
132^962 



61.4 
62.9 
57.7 
57.7 
60.1 

P) 
100.0 
100.0 
100.0 
100.0 
100.0 

100.0 



I 

118,482 91.5 



P) 

252, 846 
278,188 
268,106 
309,500 
350, 845 
385, 650 
383, 360 
433,075 
369, 570 
388, 680 

204, 812 
226, 800 
237,975 
248, 775 

16, 979 
17,074 
16, 799 
17,182 
16, 682 
19, 036 
18, 926 

18, 716 

19, 769 
21,090 
20,942 
22,564 



P) 
P) 
P) 

P) 
P) 
P) 
P) 
P) 
P) 
P) 
P) 

58.5 
63.9 
70.3 
66.5 

93.2 
88.3 
86.4 
86.1 
80.5 
89.6 
89.4 
S7.4 
82.5 
87.5 
85.5 
81.1 



Dividends to em- 
ployees. 



Amount. 



$99, 000 

2,557 
3,100 
2,896 
2,364 
1,744 
2,400 

4,011 

3,802 

9,528 
1,605 

1,704 

918 
1,234 
1,767 
2,054 
2,236 

P) 

5,549 
6,952 
10,850 
11,668 
12,180 
10,637 

1,147 

P) 

37, 927 
69,547 
80, 432 
61,900 
70,169 
38,565 
38, 336 
64,961 
36, 957 
38, 868 

16, 385 
18, 144 
19, 038 
19.902 



886 

662 

727 

1,127 

1,038 

'984 

1,175 

1,336 

1,319 

1,265 

1,409 

1,322 



1 Not reported. 



52,778 52,778 100.0 23,613 

2 No distribution made for 1914. 



Per 

cent 

of 

total 
pay 
roll. 



Per 
cent of 

Pay 
roll of 
partici- 
pants. 



6.4 

4.3 
5.2 
4.5 
3.5 
2.6 
4.0 

1.9 
1.7 

15.0 

C 1 ) 

5.2 

3.1 
3.8 
4.6 
4.6 

4.8 

P) 

6.0 
6.0 
8.0 
8.0 
8.0 
8.0 

.9 

P) 
P) 
P) 
P) 

P) 

P) 
P) 

P) 
P) 
P) 
P) 

4.7 
5.1 
5.6 
5.3 

4.9 
3.4 
3.7 
5.7 
5.0 
4.6 
5.6 
6.2 
5.5 
5.2 
5.8 
4.8 

44.7 



P) 

P) 
P). 
P) 
P) 

P) 

2. 
2. 



15.0 

P) 
6.5 

5.0 
6.0 
8.0 
8.0 
8.0 

5.0 
6.0 
6.0 
8.0 
8.0 
8.0 
8.0 

1.0 

' 4.0 
15.0 
25.0 
30.0 
20.0 
20.0 
10.0 
10.0 
15.0 
10.0 
10.0 

8.0 
8.0 
8.0 
8.0 

5.2 
3.9 
4.3 
6.6 
6.2 
5.2 
6.2 
7.1 
6.7 
6.0 
6.7 
5.9 

44.7 



22 



BULLETIN OF THE BUREAU OF LABOR STATISTICS. 



Table 8.— NUMBER OF EMPLOYEES, PROPORTION PARTICIPATING IN PROFITS, 
DIVIDENDS TO EMPLOYEES, AND COST OF PROFIT-SHARING PLANS TO EMPLOY- 
ERS, IN 38 ESTABLISHMENTS HAVING PROFIT-SHARING PLANS— Continued. 



Es- 
tab- 
lish- 
ment 
No. 



14 



15 



16 
17 

18 
19 



Dividend 
period ending- 



20 
21 
22 
23 



Dec. 
Dec. 
Dec. 
Dec. 
Dec. 
Dec. 
Dec. 
Dec. 
Dec. 
Dec. 
Dec. 
Dec. 
Dec. 
Dec. 
Dec. 
Dec. 

June 
June 
June 
June 
June 
June 
June 
June 
June 
June 
June 



31, 1899. 
31, 1900. 
31, 1901. 
31, 1902. 
31, 1903. 
31, 1904. 
31, 1905. 
31, 1906. 
31, 1907. 
31, 1908. 
31, 1909. 
31, 1910. 
31, 1911. 
31, 1912. 
31, 1913. 
31, 1914. 

30, 1905 . 
30, 1906. 
30, 1907. 
30, 1908. 
30, 1909. 

30. 1910. 

30. 1911. 

30. 1912. 
30, 1913. 
30, 1914. 
30, 1915 . 



Dec. 31, 1914. 
Dec. 31, 1914. 
Jan. 1,1915.. 



Dec. 10, 1898. 
June 9, 1899.. 
Dec. 8, 1900. . 
June 7, 1901 . . 
Dec. 13, 1902. 
June 12, 1903. 
Dec. 10, 1904. 
June 2, 1906 2. 
June 8, 1907.. 
June 6, 1908.. 
June 5, 1909 . . 
June 4, 1910.. 
June 3, 1911 . . 
June 1,1912.. 
May 31, 1913. 
June 6, 1914.. 
June 5, 1915. . 



Dec. 31, 1915. 
Oct. 1, 1915- 



Dec. 28, 1914 

Dec. 31,1902.... 

Dec. 31,1903 

Dec. 31,1904.... 

Dec. 31,1905 

Dec. 31,1906.... 
Dec. 31,1907.... 

Dec. 31,1908 

Dec. 31, 1909 

i Not reported 



Aver- 
age 
num- 
ber of 
em- 
ploy- 
ees. 



55 

55 

65 

100 

79 

90 

96 

120 

142 

138 

153 

161 

154 

149 

154 

161 

182 
190 
202 
210 
215 
200 
201 
236 
240 
245 
255 

43 

18 

600 

390 
332 
353 
485 
671 
640 
629 
600 
661 
692 
717 
709 
692 
717 
705 
715 
716 

66 

270 

125 

0) 
0) 

& 

0) 

( x ) 

C 1 ) 



Employees 
participat- 
ing in 
profits. 



Num- 
ber. 



Per 

cent 

of 

total. 



34 

45 

55 

53 

51 

64 

64 

64 

72 

97 

98 

106 

124 

116 

117 

113 

114 
119 
116 
133 
145 
134 
131 
142 
140 
147 
178 

34 

16 

401 

267 
222 
274 
327 
409 
450 
259 
442 
473 
531 
551 
517 
539 
545 
546 
589 
624 

36 

125 



0) 

0) 
C 1 ) 
C 1 ) 
C 1 ) 
0) 
0) 
0) 



61.8 
81.8 
84.6 
53.0 
64.6 
71.1 
66.7 
53.3 
50.7 
70.3 
64.1 
65.8 
80.5 
77.9 
76.0 
70.2 

62.6 
62.6 
57.4 
63.3 
67.4 
67.0 
65.2 
60.2 
58.3 
60.0 
69.8 

79.1 

88.9 



68.5 
66.9 
77.6 
67.4 
61.0 
70.3 
41.2 
73.7 
71.6 
76.7 
76.8 
72.9 
77.9 
76.0 
77.4 
82.4 
87.2 

54.5 

46.3 

68.8 

95.0 
95.0 
95.0 
95.0 
95.0 
95.0 
95.0 
95.0 



Total 
pay roll. 



0) 

$45,355 

55,341 

43, 967 

44, 076 

50,569 

75,685 

80,403 

72, 617 

101, 944 

110,309 

107, 935 

104, 131 

115, 848 

124, 118 

141,000 
150,000 
151,000 
162,000 
163,000 
166,000 
165,000 
175,000 
190,000 
205, 000 
225, 000 

52, 873 

9,954 

281,317 

127, 546 
128, 951 
150, 058 
201,049 
278, 297 
259,368 
99,876 
186, 432 
269, 970 
281, 922 
286,554 
274, 299 
264,854 
279, 927 
314, 240 
312, 400 
306,299 

52,147 

250,000 

62,921 



Pay roll of par- 
ticipants. 



Amount. 



$23,545 
30,337 
33, 120 
30, 601 
24, 442 
35, 056 
32, 021 
39,834 
42, 661 
49,553 
60, 989 
63,780 
74, 610 
76,295 
81,250 
74, 152 

94,300 
104, 800 
105, 000 
114,600 
116, 500 
120,500 
121,500 
124,900 
139, 900 
150,500 
156, 700 

39,873 

8,704 

234. 936 

86,909 
80,564 
103, 397 
130, 181 
172, 162 
175, 295 
42,085 
132, 715 
196, 069 
214, 656 
215,465 
203, 599 
207, 282 
218,900 
249,497 
266, 778 
268,271 

37,794 

148,000 

46,975 

111,621 
140, 155 

132. 937 
146, 577 
208, 284 
235,233 
158, 223 
175, 808 



Per 
cent 
of 
total 
pay 
roll. 



0) 

C 1 ) 
73.0 
55.3 
55.6 
79.5 
63.3 
52.6 
53.1 
68.2 
59.8 
57.8 
69.1 
73.3 
70.1 
59.7 

66.9 
69.9 
69.5 
70.7 
71.5 
72.6 
73.6 
71.4 
73.6 
73.4 
69.6 

75.4 

87.4 

83.5 

68.1 
62.5 
68.9 
64.8 
61.9 
67.6 
42.1 
71.2 
72.6 
76.1 
75.2 
74.2 
78.3 
78.2 
79.4 
85.4 
87.6 

72.5 

59.2 

74.7 
C 1 ) 

8 

0) 
0) 
0) 

C 1 ) 
C 1 ) 



Dividends to em- 
ployees. 



Amount. 



$14, 198 
25,088 
24, 443 
30, 126 
16,885 
9,981 
29, 176 
47,800 
42,660 
38,652 
60,988 
63,781 
35, 067 
57, 221 
56, 875 
66, 736 

4,839 

5,197 

1,096 

4,534 

5,367 

4,159 

2,715 

10, 487 

6,682 

10,251 

13, 681 

■2,506 

675 

32,963 

2,069 
2,561 
3,445 
3,159 
5,448 
4,009 
1,407 
5,256 
7,842 
4,878 
5,931 
7,110 
5,150 
6,573 
6,835 
8,658 
8,736 

1,890 

7,000 

1,175 



2,881 


f 1 ) 


3,600 


P) 


3,606 


(0 


4,501 


(M 


7,594 


(!) 


8,284 


0) 


6,329 


C 1 ) 


7,032 


0) 



Per 

cent 
of 

total 
pay 
roll. 



Per 

cent of 
pay 
roll of 
partici- 
pants. 



0) 
0) 
53.9 
54.4 
38.4 
22.6 
57.7 
63.2 
53.1 
53.2 
59.8 
57.8 
32.5 
55.0 
49.1 
53.8 



6.0 
3.5 
5.0 
6.1 

4.7 

6.8 

11.7 

1.6 
2.0 
2.3 
1.6 
2.0 
1.5 
1.4 
2.8 
2.9 
1.7 
2.1 
2.6 



3.6 
2.8 



2 No distributions made between Dec. 10, 1904, and June 2, 1906. 



PROFIT SHARING IN" THE UNITED STATES. 



23 



Table 8.— NUMBER OF EMPLOYEES, PROPORTION PARTICIPATING IN PROFITS, 
DIVIDENDS TO EMPLOYEES, AND COST OF PROFIT-SHARING PLANS TO EMPLOY- 
ERS, IN 38 ESTABLISHMENTS HAVING PROFIT-SHARING PLANS— Continued. 



Dividend 
period ending- 



Dec. 31, 1910. 
Dec. 31,1911. 
Dec. 31,1912. 
Dec. 31,1913. 
Dec. 31,1914. 



Dec. 
Dec. 
Dec. 
Dec. 
Dec. 
Dec. 
Dec. 
Dec. 
Dec. 
Dec. 
Dec. 
Dec. 
Dec. 
Dec. 



31, 1901. 
31, 1902. 
31, 1903. 
31, 1904. 
31,1905. 
31, 1906. 
31, 1907. 
31, 1908. 
31, 1909. 
31, 1910. 
31, 1911. 
31, 1912. 
31, 1913. 
31, 1914. 



Dec. 31, 1912. 
Dec. 31, 1913. 
Dec. 31, 1914. 
Dec. 31, 1915 . 



Sept. 1, 1914. 
Sept. 1, 1915. 



Dec. 31, 1914. 

Apr. 1, 1913. 
Apr. 1, 1914. 
Apr. 1, 1915. 



Jan. 30, 1910. 
Jan. 30, 1911. 
Jan. 30, 1912. 
Jan. 30, 1913. 
Jan. 30, 1914. 
Jan. 30, 1915. 



Dec. 31, 1910. 
Dec. 31, 1911. 
Dec. 31, 1912. 
Dec. 31, 1913. 
Dec. 31, 1914. 



March, 1908.. 
March, 1909.. 
March, 1910.. 
March, 1912.. 
March, 1913 . . 
March, 1915 . . 

Dec. 31, 1911. 
Dec. 31, 1912. 
Dec. 31, 1913. 
Dec. 31, 1914. 

Dec. 31, 1915. 

June 30, 1911. 
June 30, 1912. 
June 30, 191.3 . 
June 30, 1914. 



Aver- 
age 
num- 
ber of 
em- 
ploy- 
ees. 



249 
252 
279 
283 

278 

158 
169 
218 
227 
288 
371 
313 
222 
341 
425 
387 
428 
567 
456 

99 
103 
101 
106 

86 
85 

900 

63 
62 
62 

161 
160 
178 
193 
204 
183 

76 

83 

91 

101 

105 



Dec. 31,1915 11 



Employees 
participat- 
ing in 
profits. 



Num- 
ber. 



1(3 
18 
18 
17 

18 
19 

6,349 

8,177 
8,447 
7,348 

25 

890 
1,186 
1,045 
1,062 



239 
244 
270 
275 
272 

52 

71 

71 

78 

101 

116 

98 

116 

139 

139 

152 

156 

184 

225 

91 
100 

95 
106 

75 
74 

813 

49 
52 
51 

47 
49 
61 
62 
68 
64 

68 
64 
68 
78 
82 

11 

16 
18 
18 
17 
18 
19 

4,001 
4,712 
5,676 
6,466 

18 

574 
591 
585 
665 



Per 

cent 

of 

total 



96.0 
96.8 
96.8 
97.2 
97.8 

32.9 
42.0 
32.6 
34.4 
35.1 
31.3 
31.3 
52.3 
40.8 
32.7 
39.3 
36.4 
32.5 
49.3 

91.9 

97.0 

94.1 

100.0 

87.2 
87.1 

90.3 

77.8 
83.9 
82.3 

29.2 
30.6 
34.3 
32.1 
33.3 
35.0 

89.5 
77.1 

74.7 
77.2 
78.1 

100.0 

100.0 
100.0 
100.0 
100.0 
100.0 
100.0 

63.0 
57.6 
67.2 
88.0 

72.0 

64.5 
49.8 
56.0 
62.6 



Total 

pay roll. 



$173, 123 
177, 746 
171,889 
181,113 
160, 452 

68, 304 
82, 718 
103, 489 
101,573 
133,379 
164, 872 
138, 602 
115,329 
152, 791 
198,090 
182, 018 
218, 391 
309,346 
263, 371 

74, 077 
88, 452 
91,340 
99, 133 

74. 896 
76, 325 

795, 800 

60,538 
59, 186 
60,068 

132,328 
136, 946 
128, 394 
147, 866 
151, 478 
132, 148 

67,526 
67, 751 
71.031 
87,315 
86,100 

16,031 

12,964 
15,352 
14, 289 
15, 229 
16,200 
16, 486 

4,547,102 
5,791,017 
6,744.883 
6, 449; 871 

C 1 ) 

0) 

C 1 ) 
( l ) 
C 1 ) 



Pay roll of par- 
ticipants. 



Amount. 



$171,341 
176, 321 
170, 285 
180, 216 
159,383 

27, 299 
38, 031 
39,638 

40, 730 
57, 606 
66,595 
57, 036 
64, 222 
78,018 
81,386 
88, 477 
96, 456 

137, 730 
164, 360 

71, 742 

85, 363 
85,215 
93,347 

66, 900 
68, 452 

716, 000 

55, 290 
56, 892 
58,564 

41,420 
43,310 
47,340 
48, 960 
60, 290 
58, 160 

41, 403 
42, 642 
43, 207 
53, 855 
55, 622 

16,031 

12, 964 
15,352 
14,289 
15, 229 
16,200 
16, 486 

3,319,287 
4,069,370 
4,929,125 
5,364,430 



Per 
cent 
of 
total 
Pay 
roll. 



99.0 
99.2 
99.1 
99.5 
99.3 

40.0 
46.0 
38.3 
40.1 
43.2 
40.4 
41.2 
55.7 
51.1 
41.1 
48.6 
44.2 
44.5 
62.4 

96.8 
96.5 
93.3 
94.2 

89.3 
89.7 

90.0 

91.3 

96.1 
97.5 

31.3 

31.6 
36.9 
33.1 
39.8 
44.0 

61.3 
62.9 
60.8 
61.7 
64.6 

100.0 

100.0 
100.0 
100.0 
100.0 
100.0 
100.0 

73.0 
70.3 
73.1 
83.2 

Q) 



Dividends to em- 
ployees. 



Amount. 



$6,854 
7,053 
6,811 
9,011 
4,781 

3,107 

5,679 

4,891 

3,023 

7,336 

12, 287 

10, 408 

6,274 

7,400 

8,551 

8,253 

10, 992 

18, 688 

16, 743 

5,575 
23, 293 
11, 183 
20,050 

6,690 
2,054 

49, 300 

18,441 
20,880 
17, 632 

2,649 
1,933 
1, 833 
3,691 
4,012 
796 

7, 179 
5,463 
6,662 
6,200 
5,951 

6,252 

1,944 
1, 919 

708 
1,218 

805 
1,154 

238,387 
281,878 
343, 741 
266,513 

480 

48,225 
50, 892 
50, 743 
50,840 



Per 

cent 

of 

total 
Pay 
roll. 



Per 

cent of 
Pay^ 
roll of 
partici- 
pants. 



4.0 
4.0 
4.0 
5.0 
3.0 

4.5 
6.9 
4.7 
3.0 
5.5 
7.5 
7.5 
5.4 
4.8 
4.3 
4.5 
5.0 
6.0 
6.4 

7.5 
26.3 
12.2 
20.2 

8.9 
2.7 

6.2 

30.5 
35.3 
29.4 

2.0 
1.4 
1.4 
2.5 
2.6 
.6 

10.6 
8.1 
9.4 
7.1 
6.9 

39.0 

15.0 
12.5 
5.0 
8.0 
5.0 
7.0 



0.2 
4.9 
5.1 
4.1 

Q) 



C 1 ) 

0) 
0) 



4.0 
4.0 
4.0 
5.0 
3.0 

11.4 

14.9 
12.3 

7.4 
12.7 
18.5 
18.2 

9.8 

9.5 
10.5 

9.3 
11.4 
13.6 
10.2 

7.8 
27.3 
13.1 
21.5 

10.0 
3.0 

6.9 

33.4 

36.7 
30.1 

6.4 
4.5 
3.9 
7.5 
6.7 
1.4 

17.3 

12.8 
15.4 
11.5 
10.7 

39.0 

15.0 
12.5 
5.0 
8.0 
5.0 
7.0 



7.2 
6.9 
7.0 
5.0 



< l ) 



9.0 
9.0 
9.0 
8.0 



Not reported. 



24 



BULLETIN OF THE BUREAU OF LABOR STATISTICS. 



Table 8.— NUMBER OF EMPLOYEES, PROPORTION PARTICIPATING IN PROFITS, 
DIVIDENDS TO EMPLOYEES, AND COST OF PROFIT-SHARING PLANS TO EMPLOY- 
ERS, IN 38 ESTABLISHMENTS HAVING PROFIT-SHARING PLANS— Concluded. 






Es- 

tab- 

lish- 

ment 

No. 



36 



37 
38 



Dividend 
period ending- 



Aver- 
age 
num- 
ber of 
em- 
ploy- 
ees. 



Aug. 1, 1913. 
Aug. 1, 1914. 
Aug. 1, 1915. 



Dec. 31, 1913. 



2,034 
1,899 
1,810 

1,244 



Dec. 31, 1912 (i) 

Dec. 31, 1913 282 

Dec. 31, 1914 299 



Employees 
participat- 
ing in 
profits. 



Num- 
ber 



1,835 
1,649 
1,567 

529 

C 1 ) 
0) 
0) 



Per 

cent 

of 

total. 



90.2 

86.8 
86.6 

42.5 

C 1 ) 
0) 
0) 



Total 
pay roll. 



,148 
822,809 
833, 199 

1,340,685 

73,372 
219, 001 
235,344 



Pay roll of par- 
ticipants. 



Amount. 



1766, 177 
758, 204 
782, 770 

925, 759 

0) 
0) 
C 1 ) 



Per 
cent 
of 
total 
pay 
roll. 



91.3 
92.2 
93.9 

69.1 

0) 
C 1 ) 
0) 



Dividends to em- 
ployees. 



Amount. 


Per 

cent 

of 

total 




pay 
roll. 


$15,324 
15, 166 
15,655 


1.8 
1.8 
1.9 


24, 879 


1.9 


2,464 
5,938 
5,712 


3.4 

2.7 
2.4 



Per 

cent of 
Pay 
roll of 
partici- 
pants. 



2.0 
2.0 
2.0 

2.7 



0) 
0) 

C 1 ) 



1 Not reported. 

Table 9— NUMBER OF EMPLOYEES, PROPORTION PARTICIPATING IN PROFITS, AND 
NUMBER AND PER CENT OF PARTICIPANTS IN EACH SPECIFIED OCCUPATION 
GROUP, IN 34 ESTABLISHMENTS HAVING PROFIT-SHARING PLANS. 



Es- 

tab- 

lish- 

ment 

No. 



1 

2 

3 

4 

5 

G 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

29 

30 

31 

32 

33 

34 



Dividend 
period ending- 



Dec. 31,1914 
Dec. 31,1915 
Jan. 1, 1915. 
Dec. 31,1915 
Feb. 11,1916 
Mar. 31,1914 
June 30,1915 
Mar. 31,1915 
Deo. 31,1915 
Dec. 31,1915 
Dec. 31,1915 
Dec. 31,1914 
Apr. 30,1915 
Dec. 31,1914 
June 30,1915 
Dec. 31,1914 
Dec. 31,1914 
Jan. 1, 1915. 
June 5, 1915. 
Dec. 31,1915 
Oct. 1,1915. 
Dec. 28,1914 
Dec. 31,1914 
Dec. 31,1914 
Dec. 31,1915 
Sept. 1, 1915. 
Dec. 31,1914 
Apr. 1,1915. 
Jan. 30,1915 
June 30,1915 
Dec. 31,1915 
Mar. 31,1915 
Dec. 31,1914 
Dec. 31,1915 



Av- 
erage 
num- 
ber of 

em- 
ploy 

ees. 



2,575 

85 
141 
100 

75 
274 

31 
168 
172 
731 
541 

54 

31 
161 
255 

43 

18 
600 
713 

66 
270 
125 
278 
456 
106 

85 
900 

62 
183 
108 

11 

19 
7,348 

25 



Employees 
participat- 
ing in 
profits. 



Num- 
ber. 



2,265 

68 

140 

100 

51 

217 

29 

168 

146 

541 

308 

45 

31 

113 

191 

34 

16 

401 

625 

36 

125 

86 

272 

225 

106 

74 

813 

51 

64 

73 

11 

19 

6,466 

18 



Per 

cent 

of 

total 



88.0 
88.0 
99.3 

100.0 
68.0 
79.2 
93.5 

100.0 
84.9 
74.0 
56.9 
83.3 

100.0 
70.2 
74.9 
79.1 
88.9 
66.8 
87.7 
54.5 
46.3 
68.8 
97.8 
49.3 

100.0 
87.1 
90.3 
82.3 
35.0 
67.6 

100.0 

100.0 
88.0 
72.0 



Occupation groups of participants. 



Executive. Clerical 



Num- 
ber. 



30 

10 

20 

4 

3 

8 

2 

11 

15 

22 

19 

3 16 

4 
15 
13 

6 



35 
15 
11 
25 
14 
14 
28 
12 

8 
33 
14 

5 
11 

5 

3 
895 



Per 
cent. 



l 

14 
14 

4 

5 

3 

6 

6 
10 

4.1 

6.2 
35.6 
12.9 
13.3 

6.8 
17.6 



8.7 

2.4 
30.6 
20.0 
16.3 

5.1 
12.4 
11.3 
10.8 

4.1 
27.5 

7.8 
15.1 
45.5 
15.8 
13.8 



Num- 
ber. 



21 

0) 

120 

4 

7 

17 

27 

19 

13 

81 

78 

3 

19 

6 

41 

26 

2 

60 

5 

4 

14 

8 

15 

36 

21 

19 

50 

32 

16 

11 

6 

2 

( 5 ) 

0) 



Per 

cent. 



0.9 



85.7 

4.0 
13.7 

7.8 
93.1 
11.3 

8.9 
15.0 
25.3 

6.7 
61.3 

5.3 
21.5 
76.5 
12.5 
15.0 
.8 
11.1 
11.2 

9.3 

5.5 
16.0 
19.8 
25.7 

6.2 
62.7 
25.0 
15.1 
54.5 
10.5 



Sales. 



Num- 
ber. 



2 52 



37 



7 
"31 



7 

44 



3 

( 5 ) 

2 18 



Per 
cent. 



76.5 



72.5 



4.2 
5.7 



16.2 
87.5 



5.6 



3.1 

41.5 



1.7 
"9.'4 



15.8 
l66."6 



All others. 



Num- 
ber. 



2,214 
6 



92 

4- 

192 



131 

118 

407 

211 

26 

8 

92 

106 

2 



306 

605 

19 

86 

64 

243 

154 

29 

47 

716 

5 

37 

51 



11 

65,571 



Per 
cent. 



97.7 



92.0 

7.8 
88.5 



78.0 
80.8 
75.2 
68.5 
57.8 
25.8 
81.4 
55.5 
5.9 



70.8 
96.8 
52.8 
68.8 
74.4 
89.3 
68.4 
27.4 
63.5 
88.1 
9.8. 
57.8 
69.9 



57.9 

86.2 



1 Included in sales force. 
" Including clerical force. 
3 Editors and reporters. 



4 Includes 13 executive employees not shown in Table 8. 

5 Included in "all others." 

6 Including the clerical and sales forces. 



PKOFIT SHAEING IN THE UNITED STATES. 25 

ANALYSIS OF WORKING OF 12 TYPICAL PROFIT-SHARING PLANS. 

In this section of the report are given detailed accounts of the 
essential features involved, the details of administration, and the 
results of the operation of a limited number of the better known profit- 
sharing plans in operation in the United States at the present time, 
it being the intention to present to the consideration of those inter- 
ested careful analyses of plans that may be considered as typical, and 
in a certain sense, successful. The 12 plans described in the fol- 
lowing pages, although involving in a general way the same princi- 
ple — the sharing of some proportion of an employer's profits with his 
employees — reveal the great variety of methods used by employers 
in arriving at the same end. 

Plan designated as No. 1 is herewith presented largely on account 
of the comprehensiveness of the rules and regulations that govern 
the distribution of the profits. Except for the uncertainty due to 
the fact that the management reserves to itself the right to discon- 
tinue the entire arrangement at pleasure, employees under this plan, 
by referring to the printed rules and regulations, may ascertain the 
exact nature of the privileges accorded to them. The settlement of 
disputes that may arise under the provisions of the plan, including 
disqualifications from participation, is not wholly in the hands of the 
employer, for the latter in his decisions is also guided by the formu- 
lated rules. • Changes in the latter are usually made one year in 
advance, upon consultation with and with the approval of a com- 
mittee representing the employees — a permanent advisory board 
selected by the employees themselves for the specific purpose of 
assisting in the administration of the plan. 

The plan is also interesting because it shows clearly the method 
used in adjusting the proportion of the profits to be distributed to the 
constantly increasing number of participants due to either the growth 
of the organization or the extension of the benefits of the plan to 
employees originally excluded. 

PLAN NO. 1. 

A brief summary of the origin and history of this plan was given by 
the president of the company and originator of the plan in a paper 
read at the May, 1913, meeting of the Electrical Manufacturers' Club, 
at Hot Springs, Va. After stating that prior to the introduction of the 
plan investigations were made by the company of similar plans 
already in operation, he says: 

The reports of these various experiences encouraged us to make the experiment, 
but we felt that our plan must differ to a degree from any we had heard of. and our 
scheme was developed in accordance with the following considerations: 

As it was a doubtful experiment, it was confined to our factory employees, leaving 
out clerks and salesmen in our main office. 



26 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

Realizing that the results must be a question of judgment, rather than of definite 
figures, and wishing to be assisted in our judgment by the opinion of our two factory 
superintendents, whom we had interested in the experiment, we increased their 
salaries instead of making them profit sharers, in order that their judgment might not 
be biased by their own interest. 

We expected the best results, and wished particularly to benefit certain old and 
faithful employees, while from recent employees, and particularly those who were not 
likely to stay with us long, we expected very little, and we had very little interest in 
them, so that it seemed to us necessary to make a distinction, and this was accom- 
plished by the requirement that no one should be eligible to benefit until he had been 
in our employ for at least one year. 

On the principle that no partner has a right to any part of profits earned before he 
comes into the partnership, we decided that a profit sharer must be informed of his 
status, and must work as such for the full year before he is entitled to any profits. 

In order to provide ample time to make up the books of the company, and to deter- 
mine the profits, we set the time of payment as March 1, or two months after the close 
of the year. 

To further extend the time of service it was decided that no profit sharer should 
benefit who leaves our employ before the dividend date of March 1. 

To give our people the greatest stimulus it was necessary that the amount of their 
dividend should be absolutely dependent on the profits of our business for any given 
year, and that as nearly as possible the profits for each year should be separately 
determined so that no man should either gain anything from profits of the year before, 
nor lose anything from profits carried into the succeeding year when he may have left 
our employ. 

At the outset we were confronted with the difficulty that being a private corporation 
we were absolutely unwilling to make any statement from which the amount of our 
profits could be determined, which would certainly be the result should we announce 
the percentage of our profits which we proposed to pay, and later told what this per- 
centage amounted to. 

To obviate this trouble we refrained from stating the percentage of the profits which 
we proposed to pay, saying simply that such percentage was fixed in advance, although 
not published. 

At the beginning of the first year, in order to give our people some idea of the prob- 
able result, we advised them that the percentage as fixed was sufficient to justify 
the expectation that the dividend on their wages would be at least 5 per cent, provided 
the profits of that year were as large as those of the year preceding. 

In order that the administration of the profit sharing should be absolutely fair, we 
have at the beginning of each year posted a set of rules which we have been able to 
keep down to one typewritten page, and have administered each year strictly accord- 
ing to rule. 

On January 1, 19 — , we assembled our entire force and carefully explained the 
profit-sharing scheme to them, immediately after which the preliminary list and the 
rules for that year were posted. 

While our people were evidently pleased that something good was coming to them, 
it looked rather a long way off and comparatively few seemed to really understand 
the scheme. 

A repetition of the address in January, 19 — , still left the matter somewhat hazy in 
their minds, and the results for 19 — , while visible, were not as great as had been hoped. 
The actual payment of the first dividend, about March 1, 19 — , had a great effect and 
ever since the results have been much more satisfactoiy than before. 

We express the hope that our people will make wise use of the dividend, and if they 
wish to make a deposit, we allow them to go to the savings bank on our time. 



PROFIT SHARING IN THE UNITED STATES. 27 

However, as the money belongs to them, we do not presume to dictate what they 
shall do with it, except to insist that any man shall be severely disciplined who uses 
his money in such a way as to interfere with his regular work. 

The following is the text of rules and regulations governing the 
administration of the plan at the present time : 

PROFIT-SHARING RULES, 1914. 

THOSE INCLUDED. 

All employees except those specially excluded. 

PRELIMINARY LIST. 

This includes only those who have been continuously in our employ since January 
1, 1913. (See list of names in each department.) 

PROFIT SHARERS. 

This includes only those whose names are on the preliminary list, who shall remain 
continuously in our employ until March 1, 1915, and whose services shall be satis- 
factory. Anyone now on the preliminary list who may be discharged, or who may 
leave our employ before March 1, 1915, will lose all share, even though he may be 
employed again later on, and his share will be divided among those remaining. 

YOUR SHARE. 

We propose to divide among the profit sharers a definite percentage of the profits 
of our business for the year 1914, and this percentage is the same as for the year 1913, 
except that it has been increased proportionally to the increase in pay roll due to 
including the employees of our office this year for the first time. 

The actual amount of money to be divided will depend entirely on the amount 
of our profits for 1914. Each profit sharer will share in proportion to the wages he 
receives during the year. Under no condition shall we be expected to pay any profit 
sharer more than 20 per cent on his wages for the year. 

SICKNESS AND INJURY. 

Cases of absence due to sickness shall be decided at our discretion, but no dividend 
shall be paid on wages not actually received. 

In case of injury, a profit sharer shall be considered as having received his regular 
weekly wages for such weeks as he receives compensation, but such wages shall not be 
assumed at more than $20 per week nor for more than 50 weeks. 1 

DEATH BENEFIT. 1 

In case of death during the year of anyone in good standing on the preliminary 
list, a death benefit will be paid and deducted from the fund. The amount of the 
death benefit shall be at our discretion but shall not exceed the dividend rate for 
1913 on his estimated wages for the whole year of 1914. 

LAY OFFS. 1 

Any employee who may be laid off shall be considered as no longer in our employ 
unless he returns to work within six weeks. 

1 Not in rules of previous years. Suggested by committee of factory employees. 



28 BULLETIN OF THE BTJEEATJ OF LABOE STATISTICS. 



LEAVE OF ABSENCE. 1 



Leave of absence for more than six weeks shall be granted only to those who have 
been in our employ for two years, and only upon application approved by the presi- 
dent, vice president or treasurer. 



ASSIGNMENT OF WAGES. 



Receipt by us of notice of assignment of wages will cause the individual concerned 
to lose at least one-third of his profits for the year. 



TIME OF DISTRIBUTION. 



The profit-sharing dividend will be paid March 1 , 1915, or at our earliest convenience 
thereafter. 

The specific proportion of the net profits of the business to be 
distributed among the employees under this plan is fixed one year 
in advance, and although this proportion is unknown to the rank 
and file of the profit sharers, it is communicated to the accounting 
staff of the establishment. Since the introduction of the plan the 
relative proportion of profits to be distributed was increased three 
times. These increases were due wholly to the fact that gradually 
the plan was extended to include employees who did not benefit 
under it as originally constituted. In 1904 the foremen and super- 
intendents of the factory were brought under the plan; in 1910, the 
general, clerical, and commercial forces of the home office of the 
company; and, finally, in 1913, the general, clerical, and commercial 
employees of the branch office of the firm. Increases in the propor- 
tion of net profits to be distributed were in accordance with the 
relative proportional increases in the number participating and in the 
aggregate of the participating pay roll, due to the extension of the 
plan. 

A few points of this plan, it is thought, need somewhat further 
elaboration: The preliminary list referred to in the text of the plan 
is made up one year in advance, for instance, for 1914 it is made up 
on January 1, 1914. On it are listed all employees who have been 
continuously in the service of the company for one year prior thereto. 
From this list an estimate is made of the probable total earnings 
of the prospective profit sharers for the coining year. This estimate 
is arrived at by multiplying earnings of the participating employees 
for one normal week by 52. The object of this estimated pay roll 
is to determine in advance whether an adjustment in the propor- 
tion of profits to be distributed should be made, it being the idea of the 
management that the individual shares of profits of the older employ- 
ees ought not to be decreased on account of the extension of the 
plan to a larger number of the working force. By comparing the 
preliminary or estimated pay roll with the profits of the past year 

1 Not in rules of previous years. Suggested by committee of factory employees. 



PROFIT SHARING IN THE UNITED STATES. 29 

the management is able to determine one year in advance what it 
should fix as the proportion of the profits to be distributed during 
the coming year. 

Fourteen months after the preliminary pay roll is made up the 
final list of participating employees is compiled. At the same time 
the actual earnings of the employees on the final list are computed. 
The aggregate of the earnings of the employees on this list is known 
as the actual pay roll and serves as a basis for the distribution of the 
year's profits. 

The number of employees on the final list and the size of the actual 
pay roll, as compared with the preliminary list and the estimated 
pay roll, are considerably smaller, inasmuch as during the intervening 
year some of the employees leave or are discharged. The difference 
between the estimated pay roll and the actual pay roll is thus due 
largely to (1) differences in the amount of production, (2) differences 
in rates of wages and in number employed during the two years. 

The per cent of wages to be paid as profits is then determined by 
dividing the amount of profits available for distribution by the actual 
or participating pay roll, the share of each individual then being 
computed by multiplying the earnings (earnings for overtime work 
included) by this percentage or dividend. 

Conditions of participation as well as of forfeiture of shares in 
profits by employees are carefully formulated and described, all 
employees being informed of the exact nature of these conditions one. 
year in advance. 

This plan seems to contain relatively little of what might be termed 
arbitrariness; the rules governing its administration are framed with 
the assistance of a committee of employees selected by themselves 
annually. No changes are made in the plan without consultation 
with and approval by this committee. 

Employees under the plan may secure leave of absence from the 
company. Such leave of absence does not disqualify them from fur- 
ther participation, provided they register with the company before 
leaving. 

As stated above, one year in advance of the actual distribu- 
tion of profits a preliminary list of profit-sharing employees is 
made up. This list is revised one year afterwards to eliminate 
those of the employees on the preliminary roll who for some reason 
or other have forfeited their shares, by either leave or discharge. 
The table following shows the differences in the aggregate pay-roll 
amounts and in the number of participants on the preliminary and 
actual or participating rolls, as compared with the entire pay roll 
of the establishment and total employed on the distribution date. 



30 



BULLETIN OF THE BUREAU OF LABOR STATISTICS. 



Table 10.— NUMBER AND PER CENT OF EMPLOYEES ON THE PRELIMINARY ROLL 
AND ON THE PARTICIPATING ROLL AND AMOUNT OF SUCH ROLLS COMPARED WITH 
TOTAL PAY ROLL, BY YEARS, 1901 TO 1914. 



Year. 



Total 
em- 
ploy- 
ees. 



Employees 
on prelimi- 
nary roll. 



Num- 
ber. 



Per 
cent 
of 
total 
em- 
ploy- 
ees. 



Employees 
on partici- 
pating roll. 



Num- 
ber. 



Per 
cent 
of 
total 
em- 
ploy- 
ees. 



Total pay 
roll. 



Preliminary 
pay roll. 



Amount. 



Per 
cent 
of 
total 
pay 
roll. 



Participating 
pay roll. 



Amount. 



Per 
cent 
of 
total 
pay 
roll. 



1901 

1902 

1903 

1904 

1905 

1906 

1907 

1908 

1909 

1910 

1911 

1912 

1913.... 

1914 

Average 



158 
169 
218 
227 
288 
371 
313 
222 
341 
425 
387 
428 
567 
456 



67 
91 

97 
103 
128 
141 
168 
134 
165 
172 
194 
178 
229 
278 



42.4 
53.8 
44.5 
45.4 
44.4 
38.0 
53.7 
60.4 
48.4 
40.5 
50.1 
41.5 
40.4 
61.0 



52 

71 

71 

78 

101 

116 

98 

116 

139 

139 

152 

156 

184 

225 



32.9 
42.0 
32.6 
34.4 
35.1 
31.3 
31.3 
52.3 
40.8 
32.7 
39.3 
36.4 
32.5 
49.3 



$68, 304 
82, 718 
103, 489 
101,573 
133,379 
164, 872 
138, 602 
115,329 
152, 791 
198, 090 
182, 018 
218, 391 
309, 346 
263, 371 



$36,500 

47,600 

50,180 

56,030 

68,796 

78,411 

93, 023 

79, 230 

92, 074 

100,420 

114,504 

113, 880 

159, 160 

198, 960 



53.4 
57.5 
48.5 
55.2 
51.6 
47.6 
67.1 
68.7 
60.3 
50.7 
62.9 
52.1 
51.5 
75.6 



$27, 299 
38,031 
39, 638 
40, 730 
57, 606 
66,595 
57, 036 
64, 222 
78, 018 
81,386 
88, 477 
96, 456 
137, 730 
164, 360 



40.0 
46.0 
38.3 
40.1 
43.2 
40.4 
41.2 
55.7 
51.1 
41.1 
48.6 
44.2 
44.5 
62.4 



326 



153 



46.9 



121 



37.2 



159, 448 



92,055 



57.7 



74, 113 



46.5 






For the period covered by the figures shown in the preceding 
table, representing the entire life of the plan, the average proportions 
of the total employed and of the total pay roll that appeared on the 
preliminary profit-sharing roll were 46.9 per cent and 57.7 per cent, 
respectively. By postponing the actual participation date one year, 
the above-given proportions were reduced, on the average, about 
one-fifth, to 37.2 per cent and 46.5 per cent, respectively. The table 
shows that at no time during the existence of the plan did the pro- 
portion of the total employed that participated in the distributed 
profits exceed 52.3 per cent. The average proportion that partici- 
pated during the entire period was slightly above one-third of all 
employed, namely, 37.2 per cent. 

Since the introduction of the plan in 1901, the following profit- 
sharing dividends on the earnings of the participants were paid: 

Table 11.— PER CENT OF EARNINGS OF PARTICIPANTS PAID AS PROFIT-SHARING 

DIVIDENDS, BY YEARS, 1901 TO 1915. 



Year. 


Dividend 
(per cent 
of earn- 
ings). 


Year. 


Dividend 
(per cent 
of earn- 
ings). 


Year. 


Dividend 
(per cent 
of earn- 
ings). 


1901 
1902 
1903 
1904 
1905 


11.4 

14.9 

' 12.3 

7.4 

12.7 


1906.... 
1907.... 
1908.... 
1909. . . . 
1910. . . . 


18.5 

18.2 
9.8 
9.5 

10.5 


1911.... 

1912.... 
'1913.... 
1914.... 
1915.... 


9.3 
11.4 
13.6 
10.2 

8.3 



PROFIT SHARING IIST THE UNITED STATES. 31 

The highest dividend paid under the plan since its inception in 
1901 was 18.5 per cent, in 1906; the lowest, 7.4 per cent, in 1904. 
The average dividend during the entire period was about 12 per 
cerit. 

The profit-sharing plan of this company was copied and, with a 
very few modifications, put into operation in 1915 in the establish- 
ment of the Co., with the following results of the first year's 

operation of the plan: 

(1) Proportion participating — per cent of total employed, 54.5; 
(2) pay roll of participating employees — per cent of total pay roll, 
72.5; (3) amount distributed — per cent of total pay roll, 3.6; (4) 
amount distributed— per cent of pay roll of participating employees, 5. 

PLAN NO. 2. 

The distinguishing features of the plan designated as No. 2 are: 
(1) The participation of representatives of the employees in the admin- 
istration of the plan, as shown in provisions 5 and 6 of the text given 
below, and (2) the privilege granted to employees to verify the profit 
accounts of the company through the naming by them of an account- 
ant, the expense of the hiring of which is to be borne jointly by the 
management and the employees, as shown in provision 4 of the plan. 

The plan was put into operation in 1914. As a result of its work- 
ings during the following year a profit-sharing dividend of 1 per cent 
of the earnings of the participants, 84.9 per cent of all employed, 
was declared. 

The text of this plan is herewith reproduced fully : 

We, the stockholders of the Co., hereby offer and propose: 

1 . That after paying all salaries and wages as heretofore and paying all stockholders 

7 per cent annually on book value of the stock of the Co., and after creating 

a sinking fund equal to 5 per cent of our outstanding preferred stock annually (as per 
our constitution and by-laws), and after taking off a reasonable amount for wear and 
tear on buildings and machinery, said amount not to be in excess of 5 per cent of the 

book value of same, we will then take the profits of the said Co. and its branches 

and divide between the stockholders and the employees of said company according 
to the ratio that the total pay roll bears to the total capital invested. So that an indi- 
vidual employee earning $1,000 a year would share equally with the stockholder 
whose stock has a book value of $1,000. 

2. These profits are to be paid to the employees of said corporation annually, only 
those employees participating who shall have put in at least nine months of service 
during the 12 months just previous to the end of the fiscal year. 

3. The share of the profits that would accrue to the transient labor shall be used 
for shop betterment, and if found necessary both the employees and the stockholders 
will be expected to contribute their share for additional shop betterment from time 
to time. But no more than 10 per cent of said profits shall be employed in additional 
shop betterment in any one year. 

4. It is understood that the employees are to have the sole naming and employing 
of a chartered accountant to ascertain the actual profits from year to year. The ex- 



32 BULLETIN" OF THE BUREAU OF LABOR STATISTICS. 

pense of said accountant to be paid (from profits) before a division is made. In case 
that for any reason there are no profits to divide, the report of the above-mentioned 
accountant shall be to the effect that there will be no profits this year for division. 

5. The employees of said Co. shall elect a committee of three from each 

of the following departments to act as a general committee representing the em- 
ployees: 

(a) From the mattress-making department and feather room; (6) from the tick- 
making department; (c) from the office and shipping department; (d) from the iron- 
bed department and machine shop; (e) from the first floor woodworking, couch-mak- 
ing, and spring-bed department other than the Way Sagless; (/) from the Way Sagless 
department; (g) from the brass-bed department; (h) from the traveling men and 
branch managers. 

6. No foreman is eligible to a place on this committee, but the foremen will be 
invited in by the management at all conferences. Committees for safety and shop 
betterment will be selected from time to time to cooperate with the general committee. 

PLAN NO. 3. 

Plan No. 3 contains a peculiar provision for the determination of the 
individual shares in the divisible profits, the method of determining 
such shares being rather arbitrary, at the discretion of the employer, 
there appearing no rules formulated in advance as to how the indi- 
vidual shares will be computed. 

Under this plan, the employees selected to participate are given 
profit-sharing certificates stipulating the total number of shares out 
of the distributable net profits (the divisible fund consisting of 3,000 
shares) to which they are entitled. In April of each year a general 
account of the profits of the business is made and out of the net earn- 
ings, after deducting the usual depreciation, dividend, and interest 
charges, at least one-fourth is set aside for distribution among profit- 
sharing employees in such proportions as their respective holdings 
bear to the total number of shares issued. Those holding certificates 
less than a year receive a share in the profits proportionate to the 
length of time they have held their certificates. 

Certificates must be surrendered and all benefits cease upon the 
death of the employee or upon his leaving the service of the com- 
pany, whether he leaves voluntarily or is discharged, even without 
justifiable cause, or upon the withdrawal of the certificate from him 
by the company without the holder ceasing to be an employee. A 
share of the profits proportionate to the part of the year during which 
the certificate has been held is given, however, in the event of the 
death of a shareholder, to his personal representative; or to the 
employee upon terminating the employment by discharge not for 
justifiable cause, or upon withdrawal of a certificate by the company. 

The results of the operation of the plan in 1914 were as follows: 
Per cent of total employed participating, 66.8; profit-sharing divi- 
dend on the regular earnings of the employees, 14 per cent; cost of 
the plan to the employer in terms of the entire pay roll of the estab- 
lishment, 11.7 per cent. 



PROFIT SHARING IN THE UNITED STATES. 33 

The following is the original text of this plan in full : 

First. The company agrees, during the continuance of this agreement, to set apart 
for division among its employees an amount equal to not less than one-quarter of the 
net profits of said business; such profits to be determined as hereinafter provided. 
The amount assigned for distribution is hereinafter called the distributable profits. 

Second. The rights to the distributable profits as determined by the company shall 
be divided into three thousand (3.000) or more shares to be issued from time to time, 
each share entitling the person who at the close of the profit year is the owner thereof 
to that proportion of the distributable profits which one bears to the total number of 
shares issued; and in case such share has at the close of the profit year been held less 
than a year, to that proportion of one share of such distributable profits which the part 
of the year subsequent to the date of the issue of the certificate to him bears to a full 
year. 

Third. The distribution of the profit shares shall be made by the company to the 
employees in such proportions as the company deems advisable . The number of profit 
shares to be issued may be increased from time to time as the company may deem 
advisable. The company may at any time in its discretion withdraw profit shares 
from any holder thereof, even though he remains an employee . 

Fourth. Every employee entitled to profit shares shall receive a certificate specify- 
ing the number of shares to which he is entitled. 

Fifth. Every owner of one or more shares provided for in article second shall have 
by virtue thereof the following rights and none others, and be subject to the following 
obligations: 

1. The owner of each share on the first day of the profit year (which shall begin some 
day in April) shall upon the distribution of profits hereunder for the profit year ending 
the day preceding, receive that proportion of the distributable profits as specified 
which one bears to the total number of profit shares issued ; or, if he has then held the 
share for less than one year, that fractional part of such distributable profits incident to 
one share which is proportionate to the part of the year subsequent to the date of issue 

2. Every shareholder shall be bound to accept the determination of the distribu- 
table profits made by the company as final and conclusive, and shall have no right to 
an accounting or to recovery of any profits except such as the company shall determine 
to be the profits distributable to him. 

3. The ownership of each share shall cease upon the death of the owner or upon his 
otherwise actually ceasing for any cause to be in the employ of the company, whether 
such owner has voluntarily left the employ or has been discharged, even without justi- 
fiable cause; or upon the withdrawal of the share from him by the company without 
the holder ceasing to be an employee: But upon the death of a shareholder his per- 
sonal representative, and upon termination of employment by discharge not for justi- 
fiable cause, or upon such withdrawal of the share by the company, the employee 
shall be entitled at the next distribution of profits to receive for each share represented 
by such certificate the part of the distributable profits incident to one share as deter- 
mined for the profit year current at the termination of his ownership proportionate to 
the part of such year during which such employee held such share. Upon termination 
of employment otherwise than by death or discharge not for justifiable cause, the em- 
ployee shall not be entitled to any part of the profits for the then current profit year, 
but may be given such part, if any, as the company .thinks fit. 

4. Each owner of a share and the personal representative of each deceased share- 
holder shall upon the termination of his ownership at once surrender his certificate 
to the company. 

5. No share shall be transferable by the owner. 

6. The right of a shareholder to receive profits shall not be assignable, and no pay- 
ment shall be made in accordance with any assignment or order by way of anticipation; 

56831°— Bull. 208—17 3 



34 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

nor shall any profits be payable for any year unless the profit-sharing certificate is pre- 
sented to the company with request for such payment, not later than three months after 
the profits are payable, unless otherwise directed by the company. 

Sixth. All shares issued to employees shall upon the termination of ownership as 
above provided revert to the company and shall thereafter be treated as unissued 
shares, subject to reissue by the company from time to time. 

Seventh. For the purpose of this agreement a general account of the profits of 
the business shall be made up each year as of some day in April. The profits of the 
company, of which at least one-quarter is to be set apart for the employees, shall 
be taken to be the net earnings of the company ascertained in the customary manner, 
and after deducting also the customary depreciation charge, the dividend paid on the 
preferred stock, and the interest on outstanding scrip. 

Eighth. The company reserves among other things the full right to make such modi- 
fication in the salaries of employees as it sees fit, not inconsistent with the by-laws, 
and to increase or diminish the number of employees. 

Ninth. All property and assets employed or to be employed in the business shall 
remain the sole and exclusive property of the company, and it shall have full authority 
and entire control in all matters relating to the business. 

Tenth. The company shall have the right to make from time to time such modifi- 
cation in the terms of this plan and agreement as it shall deem fit, and may at any time 
terminate the agreement and all right to share in the profits. If notice to terminate 
is given in any year before July 1, it shall operate as of the commencement of the profit 
year. If such notice is given after July 1 it shall take effect at the close of the then 
current year. 

Eleventh. The rights herein reserved to said company shall inure to and be exer- 
cisable by its successors and assigns. 

PLAN NO. 4. 

Plan No. 4 has been in operation several years and is interesting 
chiefly because of the method used in apportioning the divisible 
fund to the various groups of the participating employees. Under 
this plan 52 per cent of the net profits of the business over and 
above what is assumed to be a moderate return on the investment 
becomes available for distribution. Over four-fifths of this fund, 
however, goes to the executive employees — 13 in number and about 
6 per cent of all employed — the remaining one-fifth being distributed 
among the rank and file of the working organization. The result 
of this method of distribution has been that while profit-sharing 
dividends on regular earnings averaged about 100 per cent for the 
executive group, these dividends averaged only about 5 per cent for the 
rank and file of the employees. 

Originally the plan applied only to head workmen and a few of the 
higher executives. In 1892 the plan was extended to cover the 
clerical employees of the company, and shortly after the productive 
force was brought under it.' 

At the present time the company, after paying all the legitimate 
expenses of the undertaking, including 6 per cent on the capital 
invested, distributes the remaining net profits as follows : 

1. Of the remaining net profits 42 J per cent is paid to a group of 
executive employees numbering 13, the specific proportion assigned 






PROFIT SHARING IN THE UNITED STATES. 



35 



to each member of this group depending entirely upon the relative 
importance of his or her position. Of the 13 employees mentioned, 
seven receive 5 per cent each; one, 2 per cent; two, If per cent each; 
and three, two-thirds of 1 per cent each of the divisible profits. 

2. Ten per cent is divided among the entire working organization, 
exclusive of the employees above described, the basis of the distribu- 
tion being the annual earnings of each one of them. 

3. The remaining 47| per cent is paid in extra dividends to the 
stockholders of the company. 

The employees referred to in the first group are chiefly heads and 
assistant heads of departments and technical men who are selected 
for participation because of the importance and responsibility of the 
positions they hold, and because it is thought that upon their indi- 
vidual efforts, more than any other factor, depend the profits of the 
concern. 

All salaried employees become eligible to share in the profits one 
year after entering the employ of the firm. All other employees 
must be in the service of the company at least two years before 
becoming eligible for participation. 

The table given below shows the aggregate salaries and shares of 
profit of the executive employees and of employees other than 
executive, by years, since 1905. 

Table 12.— EARNINGS AND SHARES OF PROFITS OF EXECUTIVE EMPLOYEES AND 
OF OTHER EMPLOYEES, BY YEARS, 1905 TO 1915. 





Executive employees. 


Employees other than 
executive. 


Year. 


Salaries. 


Profit-sharing 
dividend. 


Wages. 


Profit-sharing 
dividend. 




Amount. 


Per cent 

of 
salaries. 


Amount. 


Per cent 

of 
wages. 


1905 


$20, 700 
19,200 
21,000 
19, 350 
15,900 
16,500 
16, 500 
20,100 
20, 100 
22, 500 
33,300 


$17, 423 
17,668 

3,835 
14, 965 
13, 420 
12, 063 

7,875 
32, 510 
20,721 
36,931 
58, 830 


84.2 

92.0 

18.3 

77.3 

81.4 

73.1 

47.7 

161.7 

103.1 

164.1 

176.7 


$94, 300 
104,800 
105,000 
114,600 
116,500 
120,500 
121, 500 
124,900 
139, 900 
150, 500 
156, 700 


$4,839 
5,197 
1,096 
4,534 
5,367 
4,159 
2,715 

10, 487 
6,682 

10, 251 

13,681 


5.1 


1906 


5.0 


1907 


1.0 


1908 


4.0 


1909 


4.6 


1910 


3.5 


1911 


2.2 


1912 


8.4 


1913 


4.8 


1914 


6.8 


1915 


8.7 






Average 


20, 468 


21,476 


104.9 


122, 655 


6,273 


5.1 







The average profit-sharing dividend for the executive employees 
for the last 11 years of the operation of the plan was 104.9 per cent 
of the average amount paid as salaries; i. e., they received more in 
profits than in salaries, the dividends of individual years varying 
considerably, from 18.3 per cent of the salaries in 1907, to 176.7 per 
cent in 1915. 



36 



BULLETIN OF THE BUREAU OF LABOR STATISTICS. 






The average profit-sharing dividend of employees other than 
executive for the years 1905 to 1915 was 5.1 per cent of the wages 
received, the dividends of specific years varying from 1 per cent of 
the wages in 1907 to 8.7 per cent in 1915. 

The relative numerical strength of the two groups of participants 
is shown in the following table, by years : 

Table 13.— NUMBER AND PER CENT OF EMPLOYEES PARTICIPATING IN PROFIT 
SHARING, AND NUMBER AND PER CENT OF PARTICIPANTS BELONGING TO EACH 
SPECIFIED CLASS, BY YEARS, 1905 TO 1915. 





Total 
employ- 
ees. 


Employees participating in 


profits. 




Year. 


Executive employ- 
ees. 


Employees other 
than executive. 


Total. 




Number. 


Per cent 
of total 
partici- 
pating. 


Number. 


Per cent 
of total 
partici- 
pating. 


Number. 


Per cent 
of total 
employ- 
ees. 


1905 


182 
190 
202 
210 
215 
200 
201 
236 
240 
245 
255 


9 

9 

10 

10 

8 

8 

8 

10 

10 

11 

13 


7.3 
7.0 
7.9 
7.0 
5.2 
5.6 
5.8 
6.6 
6.7 
7.0 
6.8 


114 

119 
116 
133 
145 
134 
131 
142 
140 
147 
178 


92.7 
93.0 
92.1 
93.0 
94.8 
94.4 
94.2 
93.4 
93.3 
93.0 
93.2 


123 
128 
126 
143 
153 
142 
139 
152 
150 
158 
191 


67.6 


1906 


67.4 


1907 


62.4 


1908 


68.1 


1909 


71.2 


1910..... 


71.0 


1911 


69.2 


1912 


64.4 


1913 


62.5 


1914 


64.5 


1915 


74.9 






Average 


216 


10 


6.6 


136 


93.4 


146 


67.6 







Since 1905 the ratio of participating executives to participants in 
all other occupations was, on the average, 6.6 to 93.4, the annual 
variations presenting no violent fluctuations from the stated mean. 
During this period an average of 67.6 per cent of all employees par- 
ticipated in the profit sharing. 

The following table shows how the divisible fund has been appor- 
tioned among the two groups of participants since 1905, by years: 

Table 14.— AMOUNT AND PER CENT OF TOTAL PROFIT-SHARING FUND RECEIVED BY 
EACH CLASS OF EMPLOYEES, BY YEARS, 1905 TO 1915. 



Year. 


Total 
fund. 


Received by execu- 
tive employees. 


Received by all 
other employees. 




Amount. 


Per cent. 


Amount. 


Per cent. 


1905 


$22,262 
22, 865 
4,931 
19,499 
18, 787 
16,222 
10, 590 
42, 997 
27,403 
47, 182 
72,511 


$17, 423 
17, 668 

3,835 
14,965 
13,420 
12,063 

7,875 
32,510 
20, 721 
36, 931 
58,830 


78.3 
77.3 
77.8 
76.7 
71.4 
74.4 
74.4 
75.6 
75.6 
78.3 
81.1 


$4,839 
5,197 
1,096 
4,534 
5,367 
4,159 
2,715 

10,487 
6,682 

10,251 

13,681 


21.7 


1906 


22.7 


1907 


22.2 


1908 


23.3 


1909 


28.6 


1910 


25.6 


1911 


25.6 


1912 


24.4 


1913 


24.4 


1914 


21.7 


1915 


18.9 






Average 


27, 750 


21, 476 


77.4 


6,273 


22.6 







PROFIT SHARING IN THE UNITED STATES. 37 

The annual divisible profits for a period of 11 years were appor- 
tioned among the two principal groups of participants — executives 
and "all others" — on the average in the ratio of 77.4 to 22.6. 

The results of the working of the plan as a whole for a period of 1 1 
years may briefly be summarized as follows: The executive group of 
employees — on the average 6.6 per cent of all participating, received 
over three-fourths of the entire divisible fund, while all other profit 
sharers, numbering over 90 per cent of the total force, received, on 
an average, slightly less than one-fourth of the fund, the so-called 
profit-sharing dividends on annual earnings of the respective groups 
having been 104.9 per cent and 5.1 per cent, respectively. 

PLAN NO. 5. 

Under plan No. 5 all the net profits of the business over and above 
a 6 per cent return on the capital invested is distributed between the 
participating employees and the firm on the basis of the earnings of 
the employees and the interest on the capital invested. The object of 
the plan, however, is not to augment the current earnings of the em- 
ployees, but rather to create for the participating employees an 
annuity to become available at the time when their productive powers 
begin to decline. 

This company was organized in 1873, but the subject of profit 
sharing, although under discussion for some years, was not formally 
brought to the attention of the stockholders until their annual meet- 
ing of January 31, 18 — , when the matter was discussed and a special 
committee of three appointed to draw up such a plan for consideration 
at the next meeting of the stockholders, to be held one week later, 
February 7, 18 — . The appointed committee on profit sharing then 
submitted a plan which was, after considerable discussion, adopted by 
a vote of 653 to 321 . At this meeting it was also unanimously decided 
to pay each man who had been in the company's employ during the 
previous year, in cash, 10 per cent of his annual earnings for the year. 

On February 24, 18 — , there was held a special meeting of the stock- 
holders at which it was voted to increase the capital stock of the com- 
pany to $300,000, $200,000 of which was to be known as preferred 
and fully paid up, and $100,000 as common stock to be issued on a 
profit-sharing plan to capital and labor. At the beginning of each year 
an inventory was to be taken showing all assets and liabilities, and the 
net amount by which the assets exceeded the liabilities was to be con- 
sidered the net gain or profit of the business for the preceding year. 
Ten per cent of this net profit was to be set aside as a sinking fund, 
and the remainder to be divided, the individual shares of the employees ■ 
to be paid 15 per cent in cash and 85 per cent in the common stock of 
the company, only those of the employees to participate in the profits 
who were in the company's employ for at least two years. This plan 



38 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

was unanimously adopted and constitutes the first real profit-sharing 
plan adopted by the company, the mentioned distribution of 10 per 
cent on the earnings of the preceding year having had no direct 
relation to the profits of the business. 

No changes of any significance were made in this plan until 1904 
when the relative proportions of each share of an employee's profits 
to be paid in cash and stock were changed from 15 and 85 to 10 and 
90, respectively. 

In 1910 the plan was again revised, the new amendments prohibit- 
ing employees from disposing of their profit-sharing stock to outsiders 
before offering it to the company on conditions stipulated in 
paragraphs 26 to 40 of the plan reproduced below. 

The provision of the so-called purchase contract prohibiting the 
sale of profit-sharing stock to outsiders was due chiefly to the fact that 
some of the employees were in the habit of selling their stock far 
below its real value, a fact resulting, it was said, in (1) outsiders get- 
ting hold of stock of the company in which they had only a speculative 
interest — a very undesirable fact from the point of view of the man- 
agement, and (2) great benefits to these outsiders because the stock, 
intrinsically, was worth more than the amount sold for by the em- 
ployees. Outsiders thus "were getting profits that they did not 
help to make." By prohibiting such sales the company prevented 
stock of the company from falling into hands of "absentee owners" 
and appropriated for the benefit of the organization profits that 
would otherwise have gone to outsiders. 

The following is a brief summary of the principal features of this 
plan: 

"Partial" wages are paid to factory employees weekly and to the 
office staff monthly; the "remaining" wages are paid to "honorary" 
employees in the manner outlined below. ' ' Honorary ' ' employees are 
those who have been continuously in the employ of the company for 
4,500 hours (2 years), and who have contractually agreed to deposit 
with the company all stock they may receive as "remaining" wages. 
"Partial" wages are here understood to be the customary wages paid 
to the same kind of labor in similar establishments; the "remaining" 
wages, which seem to be regarded by the firm as being in the nature 
of deferred wages, are to be considered the share in profits. 

To determine the profits and the "remaining" wages of the year, 
an inventory is taken on January first of each year, of all assets, 
excluding accrued interest, and all liabilities, including stock-purchas- 
ing fund 1 and sinking fund, and the face value of stock outstanding. 

In case of a loss it is to be drawn from the sinking fund. Profits are 
to be distributed in the following manner : 

1 The money set aside for the stock-purchasing fund is only temporarily withheld from being paid in 
remaining wages and extra preferred dividends. Whatever is taken from the purchasing fund to buy 
stock Is distributed at the end of the year in remaining wages and extra preferred dividends. 



J 



PROFIT SHARING IN THE UNITED STATES. 39 



(1) A dividend of 5 per cent, payable in advance out of the sinking 
fund, is received by the preferred stockholders; thus the first charge 
is used to recoup the sums taken out of the sinking fund for dividends 
on preferred stock. 

(2) Five per cent dividend is then to be paid on the common stock. 
(3)' Five dollars are paid into the stock-purchasing fund for every 

share of stock on deposit with the company. 

(4) Ten per cent of the amount then remaining is paid into the 
sinking fund. 

(5) The other 90 per cent is paid to the preferred stockholders as 
an extra dividend and to the " honorary" employees as remaining 
wages, the amounts paid to each individual being in proportion to 
his dividends or his " partial" wages, as the case may be. Nine- 
tenths of such extra dividends or "remaining" wages is paid in com- 
mon stock, the remaining one-tenth in cash, on December 1 following. 

If, in any year, the amount of the extra preferred dividends and 
" remaining" wages is greater than the regular 5 per cent preferred 
dividend and the "partial" wages, such surplus goes to the stock- 
purchasing fund. 

An employee ceases to be an "honorary" employee and thereby 
relinquishes his claims upon "remaining" wages if he sells his stock 
or draws it out of deposit, leaves the employ of the company, or is 
discharged, or is absent for a week or more without leave. He also 
forfeits the cash part of his bonus if he leaves the service of the com- 
pany or is discharged before October 1 . If an employee is engaged by 
a competitor or works for himself or for others for five years, his stock 
may be purchased by the company without his consent. 

After 25 years of service employees may retire; such employees 
may retain their shares as long as they are on the retired list and 
continue to receive the sum of $5 per share annually, in addition to 
dividends, toward the purchase of the same. Payments are made out 
of the stock-purchasing fund and must not exceed 15 in number. 

Only active employees may deposit their stock with the company 
under the purchase contract. Employees permanently injured or 
contracting a fatal illness may not deposit their stock after such 
injury or after the beginning of such illness. 

The profit-sharing plan as outlined above applies only to em- 
ployees working in the main factory at , and does not 

include salesmen or employees away from the main plant. A similar 
but less liberal form of profit sharing is practiced at the branch 
houses of the firm. 

Herewith is reproduced in full the text of this plan : 

(1) Resolved, That the preferred stock be paid a 5 per cent annual dividend quar- 
terly in advance on the 1st day of January, April, July, and October, the same to be 
taken from the sinking fund. 



40 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

(2) That the employees of the factory proper be paid partial wages weekly and 
office employees partial wages at the end of each month, which shall be full com- 
pensation for their services until they are entitled to remaining wages (see pars. 9, 
20, 21, and 22); the remaining wages of the honorary employees to be fixed at the 
end of each year after the results of the year are known. 

(3) To determine the remaining wages an inventory shall be taken January 1 of 
each year of all assets, excluding accrued interest, and all liabilities, including stock- 
purchasing fund (see pars. 7, 10, 11, 12, 32, and 34) and sinking fund (see par. 8) and 
the face value of stock outstanding without deducting the indorsements on stock on 
deposit. 

(4) In case the liabilities exceed the assets, the loss shall be drawn from the sinking 
fund ; but if the assets are greater than the liabilities the excess shall be used as follows: 

(5) 1. To replace the amounts taken from the sinking fund during the year for 
preferred stock dividends. (See par. 1.) 

(6) 2. To pay a 5 per cent annual dividend on common stock; the same to be paid 
quarterly on the 1st day of March, June, September, and December. 

(7) 3. To pay into a stock-purchasing fund $5 for every share of stock on deposit 
with the company January 1, subject to the purchasing contract. (See par. 26.) 

(8) 4. Ten per cent of the amount yet remaining shall be added to the sinking 
fund. Nothing shall be drawn from the sinking fund except to pay preferred stock 
dividends and losses in a year's business. 

(9) 5. The other 90 per cent shall be paid to the preferred stockholders as an extra 
dividend, and to the honorary employees of the company December 31 (see pars^ 
20, 21, and 22) as remaining wages; the amounts going to the several individuals to be 
proportional to their 5 per cent dividend on their preferred stock and their wages as 
honorary employees at their partial hourly wage rates. Nine-tenths of the total amount 
paid as extra preferred dividend and remaining wages shall be paid in common stock, 
figured at par as soon as possible after the inventory is completed and the other one- 
tenth shall be paid in cash on December 1. (See par. 24.) 

(10) In no year shall the amount paid in extra preferred dividends and in remaining 
wages exceed the partial hourly wages and the regular 5 per cent preferred dividends. 
If the amount to be paid should be greater, the excess shall be added to the stock- 
purchasing fund. 

(11) The stock-purchasing fund shall be increased by the amount each purchase of 
stock by the company is less than par. 

(12) The stock-purchasing fund in excess of five times the last annual indorsement 
on retired employees' stock (see par. 32) may be used to purchase stock on deposit. 
(See par. 34.) 

(13) The stock-purchasing fund shall not be used for other purposes than described 
in paragraphs 12, 32, and 34. 

(14) No stock certificates shall be issued for less than $100. The fractional amounts 
due in stock, which can not be issued in full shares, shall be known as stubs and com- 
bined into whole shares and sold at the annual meeting to the employees, owners of 
preferred stock, and the company. 

(15) The number of shares so sold shall be the sum of the stubs divided by 100, less 
the decimal. 

(16) Each bid shall be in writing and give the name of the bidder, the number of 
shares he will purchase, and the price he will pay per share. 

(17) The highest bidder shall be awarded the number of shares he has bid for; the 
next highest bidder his, and so on, until all the shares are disposed of. Should there 
not be sufficient bids to take all the stock, then more bids shall be asked for and the 
directors may instruct the secretary then to put in a bid for the company. The bidding 
shall continue until all the shares are sold. 



PROFIT SHARING IN THE UNITED STATES. 41 

(18) The proceeds of the sale shall belong to the company and they shall pay the 
stub owners such a per cent of the face of their stub as the total amount received for 
the stub shares bears to the total face value of the stub shares sold. 

(19) On March 1 the stub shares shall be issued and payment for them received by 
the company and amounts due the owners on stubs paid. 

(20) Any person who has been continuously in the employ of the company at the 
factory for 4,500 hours and has contracted to place on deposit with the company sub- 
ject to the purchase contract (see par. 26) all stock he may receive as remaining 
wages shall thereupon become an honorary employee. 

(21) Any person shall be deemed to have quit the employ of the company who has 
absented himself from his work for one week or more, without first obtaining leave of 
absence from the superintendent. 

(22) Any person who shall sell any of hie stock or draw it out of deposit (see par. 35), 
who quits the employ of the company or who has been discharged ceases to be an 
honorary employee and is not entitled to remaining wages for that year unless rein- 
stated by a vote of the directors. 

(23) The fixing of all partial wages and salaries, and the hiring and discharging of 
employees shall be done by the general manager, superintendent, or such other officer 
as the company may designate. 

(24) Any person who shall quit the services of the company or be discharged prior 
to October 1 in any year shall forfeit the cash due him on December 1 for remaining 
wages. (See par. 9.) This does not apply to persons going onto the retired list. 

(25) Any employee whether at the factory in or elsewhere may deposit 

his stock with the company and receive the benefits resulting from so doing by signing 
the following contract: 

PURCHASE CONTRACT. 

(26) Contract between the Co. of — , hereafter designated as the com- 
pany and of , hereafter designated as the owner. 

(27) This certifies that the owner has deposited with the company shares of 

the Co.'s common stock herewith attached under the following conditkms: 

(28) The owner agrees that when he sells this stock, he will sell to the company at 
the market price less all indorsements l made on it. 

(29) The market price shall be determined by the directors by adding together the, 
amounts received for the last 100 shares of the stock sold for cash, the price of which is 
definitely known, and dividing by 100. 

(30) The owner agrees that the company may, by vote of the directors, purchase 
this stock without his consent at the market price when he enters the employ of a 
competitor or has engaged actively in work for himself or for others for five years. 
(See par. 39.) 

(31) If the owner works for the company until he retires and does not again actively 
engage in work for himself or for others, then the company may not purchase the 
stock without the owner's consent so long as he lives. 

(32) In consideration of placing this stock on deposit under contract to sell, the 
company agrees to pay March 1 of each year from the stock-purchasing fund (see pars. 
7, 10, 11, 12) to the owner, after he is retired and so long as the owner's name con- 
tinues on the retired list, $5 per share toward the purchase of the same, but the com- 
pany will not make more than fifteen payments or a total of $75 per share. 

(33) In case the stock-purchasing fund is not sufficient to indorse $5 on every share 
entitled to the indorsements, the directors shall decide what shares shall be skipped. 

(34) The company agrees to purchase this stock whenever the owner requests it at 
the market price, less the indorsements if the market price is not above par, and if 
they have money in the stock-purchasing fund to purchase w'th. 

1 By "indorsement," as stated in par. 28 of the plan, is meant the $5 per share mentioned in par. 32. 



42 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

(35) In case the owner makes a written request to the treasurer for the company to 
purchase this stock and the company does not purchase in thirty days, then the owner 
may take the stock out of deposit by paying back to the company the indorsements 
and $5 per share. 

(36) If the market price at the time this stock is sold is less than the indorsements, 
it shall not be necessary for the owner to refund anything to the company. 

(37) The fact that indorsements have been made on the stock, even the full amount 
of $75, shall not prevent the owner from drawing his full common-stock dividends nor 
voting his shares. 

(38) When the owner has worked for the company 25 years, he may retire and his 
name shall be placed on the retired list and can not be removed so long as he does not 
again engage actively in work. 

(39) This matter of again engaging actively in work is to be decided by the directors 
on the merits of the case. In general, a man who earns annually less than one-half 
the living expenses of himself and those dependent on him shall not be considered 
engaging actively in work. 

(40) Persons who have been in the employ of the company 20 years, persons 60 
years old, and persons who have been injured at the company's work to such an 
extent that they can no longer earn a living may be retired and their name placed on 
the retired list by the directors. 

EXPLANATION. 

As an example of what the new resolution will do for employees, suppose a man begins 
to work when he is 28 and gets his first stock when he is 30 years old. If for 25 years he 
receives an average of three shares of stock a year he will when he is 55 have $7,500 
of stock. If he then retires his income from the dividends on the stock will be $375 a 
year and from the $5 a share indorsements it will also be $375 a year or a total of $750 a 
year. This will continue for 15 years or until he is 70 years old, when the indorsements 
will cease but the $375 dividends will continue as long as he lives. 

The money set aside for the stock-purchasing fund is only temporarily withheld 
from being paid in remaining wages and extra preferred dividends. Whatever is 
taken from the purchasing fund to buy stock is divided up at the end of the year in 
remaining wages and extra preferred dividends. 

The interest on the $5 indorsements, from the time they are made until the stock 
on which they are made is bought is a drain on the annual division, but it is proba- 
ble the profit in purchasing stock below par will offset this several times. 

It is not expected that the purchase fund will be more than sufficient to pay the 
indorsements on retired employees' stock and to purchase stock thrown on the market 
through death and broken health. Stock thrown on the market by able-bodied men 
quitting, panicky times, and bad years in our business, will have to be purchased 
with the company's other resources, withdrawn from deposit and sold outside, or 
remain unsold. When there is stock waiting to be purchased and the purchase fund 
is not sufficient to purchase all of it, then naturally the stock with the most indorse- 
ments would be purchased first. 

After bad years in our business and in panicky times probably much stock will 
be on the market. Then outside buyers will be scarce and offer less than the prices 
determined according to paragraph 29. This price will therefore then be higher than 
the true market. 

The company does not bind itself to buy stock except when there is money in the 
purchasing fund with which to buy. (See par. 33.) 

If there is nothing in the ' purchasing fund to purchase with, then the company 
may, if they see fit, use such other funds as they may have to purchase stock on or 
off deposit and offer any price they may see fit. 

If the company were to buy all of its stock at par it would have to sell all its notes, 
mortgages, bonds, merchandise, buildings, and land and go out of business. 



PROFIT SHARING IN THE UNITED STATES. 



43 



Each share bought reduces the size of the company $100. They must make improve- 
ments and they should use so much of their annual gain for improvements and expan- 
sion as seems wise, and only what is left to buy stock. At present the purchasing 
fund provided for by the by-laws seems to be all that should be set aside annually 
for that purpose. It can be increased or diminished as future experience seems to 
indicate. 

It should also be observed that only that part of the purchase fund in excess of 
five times the last annual indorsement on stock on deposit can be used to purchase 
stock. 

Should it happen for a series of years that the company did not make even enough 
to pay its common-stock dividends, yet the purchase fund would be sufficient to pay 
the indorsements on retired employees' stock for about five years and maybe much 
longer as the company might, during this time, accept some desirable bargains in stock 
and pay for them with funds other than the stock-purchasing fund and whatever the 
purchase was below par would be added to the purchase fund and make more indorse- 
ments possible on retired employees' stock. 

Only active employees may deposit their stock with the company under the pur- 
chase contract. Employees permanently injured or contracting a fatal illness may 
not deposit their stock after such injury or after the beginning of such illness. 

The following table shows the profit-sharing dividends on earnings 
paid to participating employees since 1899, by years: 

Table 15.— PER CENT OF EARNINGS PAID AS DIVIDENDS IN PROFIT-SHARING PLAN, 

BY YEARS, 1899 TO 1914. 



Year. 


Dividend 
(per cent 
of earn- 
ings). 


Year. 


Dividend 
(per cent 
of earn- 
ings.) 


Year. 


Dividend 
(per cent 
of earn- 
ings). 


Year. 


Dividend 
(per cent 
of earn- 
ings). 


1899 


60.3 

82.7 
73.8 
98.4 


1903 


69.1 

28.5 

91.1 

130.0 


1907 


100.0 

78.0 

100.0 

100.0 


1911 


47.0 


1900 


1904.. 


1908 

1909 

1910 


1912 

1913 

1914 


75.0 


1901 


1905 


70.0 


1902 


1906 


90.0 













The lowest dividend paid, 28.5 per cent, was paid in 1904, while 
the highest, 120 per cent, was paid in 1906. Fourteen times out 
of sixteen the percentage dividend on wages exceeded 60 per cent 
of the regular earnings of the participants. 

The table following shows the proportion of the total employees 
participating in the profits each year since 1899: 

Table 16.— NUMBER AND PER CENT OF EMPLOYEES PARTICIPATING IN PROFITS, BY 

YEARS, 1899 TO 1914. 



Year. 


Total em- 
ployees. 


Employees partici- 
pating in profits. 


Year. 


Total em- 
ployees. 


Employees partici- 
pating in profits. 


Number. 


Per cent. 


Number. 


Per cent. 


1899 


55 
55 
65 

100 
79 
90 
96 

120 


34 
45 
55 
53 
51 
64 
64 
64 


61.8 
81.8 
84.6 
53.0 
64.6 
71.1 
66.7 
53.3 


1907 


142 
138 
153 
161 
154 
149 
154 
161 


72 
97 
98 
106 
124 
116 
117 
113 


50.7 


1900 


1908 


70.3 


1901 


1909 


64.1 


1902 


1910 


65.8 


1903 


1911 


80.5 


1904 


1912 


77.9 


1905. 


1913 


76.0 


1906.. 


1914 


70.2 












44 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

The percentage of the total employed that participated in the 
distributed profits during the period of 1899 to 1914 varied from 
50.7 (the lowest) hi 1907 to 84.6 (the highest) in 1901. In the dis- 
tribution of 1914, 113, or 70.2 per cent of the total employed, parti- 
cipated. Over 80 per cent of the participating employees during 
that year were engaged in mechanical and manual occupations. 

On December 31, 1914, as a result of the working of the plan, 
employees of the company held 67.8 per cent of the entire common 
stock, being in the possession of 54.1 per cent of the entire capitaliza- 
tion of the concern. 

PLAN NO. 6. 

Under the plan presented below it is the usual practice of the man- 
agement to invest the accumulated shares of profits of the individual 
participants in the common or preferred stock of the company at 
the prevailing market quotations. 

The bonus, or " premium" as it is called, credited to employees is 
a percentage of their total salaries or wages for the past year equal to 
the rate of interest paid on capital for the same year. 

Whenever the accumulated " premiums " are sufficient to buy one 
or more preferred shares of the capital stock of the employing com- 
pany at the then market price, the president of the company may 
either (1) pay to the employee in cash the amount of such premium 
or premiums, or (2) may purchase one or more such preferred shares 
for the employee; the latter form of "premium" payment is invari- 
ably adopted. Any balance remaining to the credit of the employee 
after such shares have been purchased bears 4 per cent interest. 

Only those employees who have been in the employ of the com- 
pany for one year before the beginning of any fiscal year take part in 
the apportionment which is made; thus an employee must be two 
years with the company before he receives any part of the profit- 
sharing fund. 

The directors, with the advice of foremen and "others in a position 
to judge," determine which of the employees are entitled to receive 
premiums, which should include those who have shown ' ' the greatest 
regularity, intelligence, and energy in the company's business"; 
likewise the board of directors reserves the right to fix at their dis- 
cretion the number of profit sharers. 

The company believes that these restrictions are very necessary 
to the success of the scheme, as they prevent "the employees from 
accepting the apportionment merely as an increase of their salary, 
instead of a reward for actual merit applicable only to the best 
employees." 

Employees discharged or voluntarily leaving the service of the com- 
pany before the end of the fiscal year forfeit their rights to premiums 



PROFIT SHARING IN THE UNITED STATES. 45 

for the current year, but receive any balance due them for premiums 
of the previous year. 

Shares bought for employees are their absolute property, and they 
may sell them at any time. An employee intending to sell his shares, 
however, is obliged to notify the company in writing on a blank 
especially designated for that purpose, and if the sale does not meet 
with the approval of the directors, the employee selling the stock may 
be dropped from the list of profit sharers for at least one year. 

Additional cash payments toward the purchase of the stock may 
be made by the employee, such payments drawing 4 per cent interest. 

In 1911 the company invited the nomination, on the part of the 
profit-sharing employees, of a representative of their own selection 
to serve on its board of directors. 

Since the date of the origin of the plan, dividends on annual earn- 
ings ranging from 7 per cent (the lowest) to 9 per cent (the 
highest) have been paid. No figures showing extent of participation 
from the inception of the plan to 1910 are available. The following are 
the percentages of total employed that have participated in the divis- 
ible profits since 1910: In 1911, 64.5 per cent; in 1912, 49.8 per cent; 
in 1913, 56 per cent; and in 1914, 62.6 per cent. As a result of the 
workings of this plan for a period of eight years, 1907 to 1914, 3,147 
shares of common stock of the company, valued at over $280,000, 
have been acquired by the employees. 

PLAN NO. 7. 

The founder and principal owner of the business in which plan No. 
7 has been in operation for more than 25 years is considered one of 
the foremost students of the problem. His plan is said to embrace 
the most successful method used in the application of the profit- 
sharing principle in business and industry. 

The plan as it stands at present — 1915 — contains the following 
principal features: (1) Capital receives only what is considered a 
moderate return; (2) the surplusage of net profits over and above the 
return on capital is to be distributed to participating employees and 
consumers, but this surplusage does not automatically go to the 
beneficiaries of the plan. It goes instead to a so-called surplus fund 
out of "which the moneys to be distributed, in amounts to be deter- 
mined at the end of each year by the president of the company, are 
taken. As a result the fact that as a rule not all the available profits 
are distributed, the amount of money that has accumulated in the 
fund mentioned is at the present time equal to about one-half of the 
entire capitalization of the company. This fund presumably belongs 
to the company. Thus, as a matter of actual practice, not all of the 
profits of the company over and above the specified return on capital 
are utilized for profit-sharing purposes. 



46 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

The original plan of this company provided that after allowing 7 
per cent interest on the capital invested the remaining profits should 
he divided between capital and labor on the basis of the total capital 
invested and the total amount of wages paid, each employee's share 
being in proportion to his earnings for the year. Only employees 
who had been in the company's employ six months or more were 
to share. 1 

Originally the shares of profit were paid in cash or, at the option of 
the employee, stock was issued to him. After three years the rule 
was adopted by the company to pay the whole share in stock, which 
system is still in vogue. Dividends on profit-sharing stock are paid 
in cash. This applies to stock certificates as well as to stock for which 
no certificate has as yet been issued. 

The most important change of all in the general nature of this plan 
occurred in 1905 by the elimination of extra dividends above 6 per 
cent to capital and the substitution of profit sharing for consumers 
on the basis of the gross profits on the purchases of the individual 
consumer during the year. 

Under the plan as amended in 1905 and still in force, capital is to 
receive a fixed rate of interest, 6 per cent; provision is made for de- 
preciation, bad debts, and the creation of a surplus fund out of which, 
at the discretion of the firm, shares of profits are to be paid to employ- 
ees and consumers on the basis specified in the preceding paragraph. 

Employees' shares of profits under this plan are termed " dividend, 
credit balance." Since 1905 the profit-sharing balances accumulating 
during the first three distribution periods are being transferred to the 
employees in common stock of the company in amounts corresponding 
to accumulated profit-sharing dividends. Thus an employee receiv- 
ing his share of profits for the first time in January, 1911, would get 
only credit balances on the books of the. firm until January, 1914, 
when a certificate of stock would be given to him for the accumu- 
lated amount. During these three years, if he leaves the service, 
voluntarily or by discharge, he loses all the profit-sharing credit 
balances accumulated during the entire periods, retaining, however, 
the cash dividends of 6 per cent which are paid to him on blocks of 
stock corresponding from time to time to his credit balances. Em- 
ployees leaving the employ of the firm after having been under the 
plan three years or more retain their acquired stock and may dispose 
of it at pleasure. 

Originally shares of profit were paid all in cash, but since the second 
year, in order " to make the profit-sharing plan assure an increasing per- 
manency of the working force," shares are being paid all in stock. As 

1 At the present time the teamsters employed by this company in connection with its main commercial 
office are excluded from the benefits of the plan because through unionization and subsequent strikes 
their wages are "unusually high." 



PROFIT SHARING IN THE UNITED STATES. 47 

stated, after three years certificates of stock are issued to employees 
in amounts aggregating accumulated profit-sharing dividend balances 
up to even hundreds of dollars. Balances above even hundreds are 
credited subsequently to employees' accounts for a year or two and 
frequently canceled — that is, forfeited, as far as employees are con- 
cerned. It must be stated, however, that before any part of the so- 
called credit balance is canceled, the employee is given an opportunity 
to pay in the additional amount up to $100 that will buy a share of 
common stock of the company at par. As a matter of practice, if 
the balance to be paid in cash by the employee is not over $25 or $30 
he pays it, thus acquiring an additional share of stock. If the amount 
to be paid in cash is over $25 or $30, employees usually prefer to 
forfeit the balance. The common stock of the company in which 
shares of profits are paid is not listed on any stock exchange — that is, 
is not on the market. It is issued to participating employees at par, 
$100, and bears 6 per cent interest. Its actual value at the present 
time, based upon assets of the corporation, is about $160. 

One of the recent provisions of this plan prohibits employees while 
still in the employ of the company from selling their profit-sharing 
stock. In cases of real urgency and upon application made by indi- 
vidual employees, the company sometimes buys the employees' stock, 
in whole or in part. 

Although, in a general way, all the details of the plan were formu- 
lated in 1905, as a matter of practice the one factor definitely fixed 
is that specifying that after all expenses, including 6 per cent on 
capital, are paid the remaining net profits are to go to a surplus fund, 
which is cumulative from year to year and out of which the divisible 
profits are to come. The specific amount to be distributed is 
determined by the company at the end of each distribution period 
and depends chiefly upon " general prosperity of the business." As 
a matter of fact, the management in determining the amount to be 
distributed is usually guided by the profit-sharing dividend paid the 
year before. At times, when the company, on account of a poor 
business year, can not pay a considerable dividend, the surplus 
moneys accumulated in the above-mentioned fund may be utilized 
to augment the dividend of the current year. As will be shown below, 
this was done in 1904. It was stated, however, that the fund is to be 
utilized only to the extent of about one-tenth of the total contem- 
plated distribution for any specific year. 

Since 1905 only about two-thirds of the nominally divisible profits 
were actually paid out to participatmg employees and consumers. 
There thus remains on hand a surplus fund of $750,000, equal to about 
one-half of the total capitalization of the company. This fund, ac- 
cording to the statement of the company, may be utilized in the 
manner following. 



48 



BULLETIN OF THE BUEEAU OF LABOR STATISTICS. 



1. To meet general emergencies — commercial, financial, or other- 
wise. 

2. To augment the available amount of money for purposes of 
distribution among employees and consumers. 

That the former utilization of this fund seems to be the paramount 
one may be inferred from the fact, mentioned elsewhere, that in 1914, 
with this fund amounting to over half a million of dollars, the annual 
profits of the company were not considered sufficiently large to war- 
rant a profit-sharing distribution. 

No statistical data illustrating the workings of the plan between 
the year the plan was put into operation and 1896 were available. 
In the first year employees of the company were notified that the net 
profits of the business, " after allowing a commercial rate of interest on 
capital," would be apportioned equally between capital and labor, 
"to the first upon the basis of the investment and to the second upon 
the basis of the earnings of the participating employees." Owing to 
the big strike on the railroads the first year proved to be a very 
lean one and the profits made during that year allowed a profit- 
sharing dividend to the employees of only 5 per cent. The next year a 
dividend of 10 per cent was paid. It was then announced that there- 
after profit-sharing dividends would be paid in common stock. The 
dividends continued at from 8 to 10 per cent until 1892, when they 
fell to 4 per cent. Because of the disturbance of business due to the 
panic of 1893 no profits were paid till the end of 1904, when a retro- 
active 4 per cent dividend on the earnings of employees for the period 
of 1896 to 1904 was declared. The following table shows the profit- 
sharing dividends paid to participating employees under the plan 
since 1905: 



Table 17.— PER CENT OF EARNINGS PAID AS DIVIDENDS UNDER THE PROFIT- 
SHARING PLAN, BY YEARS, 1905 TO 1915. 



Year. 


Divi- 
dends 
(per cent 
of earn- 
ings). 


Year. 


Divi- 
dends 
(per cent 
of earn- 
ings). 


1905 

1906 


15 
25 
30 
20 
20 


1910 


10 
10 
15 
10 
10 


1911 


1907 


1912 


1908 

1909 


1913 


1915» 







1 No dividend paid in 1914. 

The highest per cent of dividend ever paid under the plan, 30 per 
cent on the annual earnings of the participants, was distributed in 
1907. During the year 1914 the profits of the business were not con- 
sidered sufficiently large by the management to warrant a profit- 
sharing dividend. In 1915 a profit-sharing dividend of 10 per cent 
was distributed. 



PEOFIT SHARING IN THE UNITED STATES. 



49 



The records of the company, with the exception of those for the 
years 1913 and 1915, do not permit any detailed analysis of the extent 
of participation in all of the branch establishments of this company, 
located in different parts of the United States. For the above-men- 
tioned two years the percentages of the total employed that partici- 
pated in the distributed profits were 67.7 and 74, respectively. Slightly 
over three-fourths of the participants in 1915 were engaged in occupa- 
tions other than executive, clerical, or sales — that is, belonged to 
the mechanical and manual forces of the organization. 

The following table shows the extent of participation in the com- 
mercial and manufacturing departments of the main plant of the com- 
pany during the ^ve years ending December 31, 1915, and in the 
establishment as a whole for 1913 and 1915: 



Table 18.— NUMBER AND PER CENT OF EMPLOYEES IN THE MAIN PLANT PARTICI- 
PATING IN PROFIT SHARING, BY DEPARTMENTS, AND PER CENT OF TOTAL EM- 
PLOYEES PARTICIPATING, BY YEARS, 1911 TO 1915. 





Main plant. 






Commercial department. 


Manufacturing department. 


Per cent 
of total 


Year. 


Average 
number 

em- 
ployed. 


Participating in 
profit sharing. 


Average 
number 

em- 
ployed. 


Participating in 
profit sharing. 


ployees 
partici- 
pating. 


% 


Number. 


Per cent. 


Number. 


Per cent. 




1911 


138 
137 
142 
140 


117 

114 

99 

117 


84.8 
83.2 
69.7 
83.6 


269 
267 
244 
216 


239 
231 
224 
210 


88.8 
86.5 
91.8 
97.2 


0) 
C 1 ) 
67.7 


1912 


1913 '. 


1915 2 


74.0 







Not reported. 



2 No dividend paid in 1914. 



The proportion of the total employed in the commercial department 
of the main plant that participated, clerical and commercial em- 
ployees mostly, varied from 69.7 per cent (the lowest) in 1913, to 84.8 
per cent (the highest) in 1911. The proportions in the manufacturing 
department participating — all manufacturing employees — were con- 
siderably larger, the lowest having been 86.5 per cent in 1912, and 
the highest 97.2 per cent in 1915. In 1914 no dividends were paid. 

The relatively larger permanency of the manufacturing employees, 
as shown by the higher proportion of participants among them — the 
only prerequisite for participation being continuous service for six 
months — may be accounted for by the fact that the company in con- 
nection with this manufacturing department is carrying on numerous 
schemes of welfare work and cooperation for the benefit of the em- 
ployees, the city in which the plant is located being one of the very 
few cooperative colonies in existence in the United States at the 
present time. 

56831°— Bull. 208—17 4 



50 



BULLETIN OF THE BUREAU OF LABOR STATISTICS. 



For the years 1913 and 1915 the extent of participation in the 
establishment as a whole is shown, no complete data being available 
for other years. The proportions participating were somewhat lower 
than in the commercial department of the main plant and considerably 
lower than in the manufacturing department of that plant. Over 
two-thirds of the total employed participated in the profits distributed 
during the year 1913 and nearly three-fourths during 1915. 

The following table shows the respective proportions of the out- 
standing common and preferred stock of the company that were 
owned by employees, chiefly as a result of the operations of the profit- 
sharing plan, on December 31, 1915. 

Table 19.— AMOUNT AND PER CENT OF STOCK OWNED BY EMPLOYEES. 






Kind of stock. 


Outstanding 
value. 


Stock owned by em- 
ployees. 


Number 
of em- 
ployees 
owning 
stock. 


Amount. 


Per cent 
of total. 


Common 


$1, 019, 800 
133, 800 


$269, 150 
16, 275 


26.4 
12.2 


355 


Preferred 


65 










Of the total issued common stock 26.4 per cent, and of the total 
issued preferred stock 12.2 per cent, was in the possession of em- 
ployees of the company on December 31, 1915. Of the total number 
employed 420, or about 60 per cent, were stockholders of the com- 
pany on the mentioned date. Employees thus owned and con- 
trolled 24.7 per cent of the total capitalization of the company. 
Inasmuch as preferred stock may not be acquired as shares in the 
profits (all such shares being paid in common stock) the proportion 
of the total capital of the company acquired by its employees through 
the operation of the profit-sharing plan is 23.3 per cent, or nearly 
one-fourth. 1 

PLAN NO. 8. 

The significance of plan No. 8 lies in the fact that it is the only 
plan in operation in the United States at the present time under 
which the participating employees have to obligate themselves to 
participate in the possible losses of the business, the entire arrange- 
ment taking the form of a legal obligation on the part of all concerned. 

In order to insure the covering of the possible losses the agreement 
provides that participating employees are to permit the company 
to retain 10 per cent of their regular earnings until the end of the 
distribution period, when the results of the year's business may be 
determined. In the opinion of the management, the latter provision 

1 In 1915 the founder of this concern and originator of the profit-sharing plan above described established 
in New Orleans a "Grocery and baking cooperative association." The employees of this association 
were put on a profit-sharing basis: Twenty-five per cent of all the net profits of the business, apportioned 
upon the basis of earnings, are to be distributed to them at the end of each business year. 



PROFIT SHARING IN THE UNITED STATES. 51 

eliminates from participation employees earning less than $600 per 
year, inasmuch as such employees can not afford to have one-tenth 
of then income retained for a period of 12 months. On the other 
hand, "emploj^ees earning, say, over $1,200 do not take any interest 
in the plan because the possible profits do not appear large enough 
to them." Thus the operation of the plan has been confined chiefly 
to employees whose earning power is somewhere between $600 and 
$1,200 per year, to the more skilled members of the manufacturing 
force, to foremen, and to clerical employees. 

In order to ascertain the net profits, all expenses, including depre- 
ciation of buildings, tools and machinery, and bad debts are deducted 
from the gross profits of each year; 6 per cent interest is then paid 
on the capital invested, and the balance is divided between the com- 
pany and the participating employees in such proportions as the 
total capital invested bears to total wages, the share of each employee 
being in proportion to his earnings. 

In case of a net loss (dividend on capital not being figured) it is 
to be shared between the company and the participating employees 
in the same manner as profits are shared, but under no circumstances 
is any participating employee responsible for an amount greater than 
the amount reserved from his wages. 

Employees may withdraw from the agreement or from the com- 
pany's employ at any time, but in such instances the company 
reserves the right to hold the wage reserve fund until the end of the 
year, such employees sharing in the profits or losses. The com- 
pany may at any time discharge an employee and require him to 
surrender his contract, but the employee is given the option to with- 
draw his reserve wages or leave them to participate in the results of 
the year. Should there be shortage of work, employees signing the 
agreement are not to be laid off, but the hours of labor are to be 
reduced. 

With certain restrictions employees may, through a public account- 
ant, inspect the books of the company. 

The profit-sharing dividends received by employees under the plan 
since 1910 were as follows: In 1910, 6.4 per cent; in 1911, 4.5 per cent; 
in 1912, 3.9 per cent; in 1913, 7.5 per cent; in 1914, 6.7 per cent; 
and in 1915, 1.4 per cent of the earnings. At no time during the 
existence of the plan did the proportion of participating employees 
exceed 35 per cent of the total employed. Over one-half of the 
participants in 1914 belonged to mechanical and manual occupations. 

The agreement drawn up between the company and its profit- 
sharing employees is herewith reprinted in. full. 

This article of agreement, made and entered into this — — day of — — — , one 
thousand nine hundred and — ■ — -, by and between the — — — ■ Co., party of the first 
part, and the signers hereto, all employees of said company, party of the second 
part, witnesseth as follows: 



52 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

First. It is agreed that the party of the first part and the party of the second part 

shall share the profits and losses of the business of the Co. so long as they 

are both parties to this agreement. 

Second. The profit shall be ascertained as follows: The inventory of the 1st of 
February past shall be taken as the starting point, and an inventory shall be taken 
in the same form on February 1 each year thereafter. From the gross results thus 
obtained shall be taken all expenses of every kind, including depreciation of build- 
ings, tools and machinery, and bad debts, and the results of the above shall be con- 
sidered the net gain or loss, as the case may be. If the result thus shown shall be 
gain, the capital actually invested, as shown by the inventory at the close of each 
year, shall first draw 6 per cent interest (or in case there is less than that amount, 
shall draw what net gain there is in liquidation of its claim), the balance then re- 
maining shall be divided between the party of the first part and the party of the 
second part in such proportions as the actual capital invested in the business bears 
to the total wages of the party of the second part for each current year. The total 
amount coming to the party of the second part shall be divided among its individual 
members as the year's earnings of each bear to their total earnings. 

Third. For each current year one-tenth of the wages of each of the parties of the 
second part shall be withheld by the party of the first part weekly; and in case there 
has not been a net loss on the entire business of the year this reserved money, together 
with his share in any accrued profit as figured above, shall be paid to each of the 
parties of the second part on or before March 1 of each succeeding year. 

Fourth. In case there should be a net loss made on the business of the year with- 
out figuring any dividend for capital as above provided, this loss shall be divided 
between the party of the first part and the party of the second part in the same manner 
as described for dividing profit; but the party of the second part in no case shall 
become responsible for losses greater than the amount reserved from his wages. 

Fifth. Other employees of the Co. may become parties to this agreement 

after this date on invitation of the party of the first part; but the computation of their 
share shall be figured only on wages earned after the date of their signature. Any 
party of the second part may withdraw either from this contract or from the com- 
pany's employ at any time, but the party of the first part holds the right to retain 
his reserve until the expiration of the current year; and if said reserve is held its 
owner shall share in profits or losses at the expiration of said current year, but in no 
case can any party of the second part share in the profits or losses unless his reserve 
has been retained until the end of the year except as provided in article seventh. 

Sixth. The party of the first part can at any time discharge any party of the second 
part from its employ and require him to withdraw from this contract; but in such 
case said party of the second part shall have the option to withdraw his full reserve 
or to leave it until the end of the year to share in results as above described. 

Seventh. It is further agreed by the party of the first part that no party of the 
second part shall be temporarily retired from work so long as the party of the first 
part has any work of the kind said party of the second part is accustomed to do; but 
if there should be a shortage of work in the hands of the party of the first part it shall 
reduce the hours of work and so divide the work between the parties of the second 
part. If at any time any party of the second part should become sick or incapaci- 
tated to perform his duties, and has the certificate of a reputable physician that he 
is so incapacitated, after two weeks' duration of said sickness said party can draw 
on his reserve wages at a rate not greater than $6 per week without affecting his inter- 
ests in the profits at the end of the year. Further, if anjr party of the second part 
should become injured on account of any accident while in the employ of the party 
of the first part, said party of the first part shall, at its own expense, provide him 
with a competent physician or surgeon after application is made to it stating that 
such services are needed. 



PEOFIT SHARING IN THE UNITED STATES. 53 

Eighth. If any of the parties of the second part wish to inquire into the accuracy 
of the annual report made to them by the party of the first part, the books of the 
party of the first part shall be opened for inspection by any reputable public account- 
ant employed by the party of the second part, provided such accountant will agree 
to confine his report to the statement that the company's report was or was not cor- 
rect; and if not correct, shall fully define its error. 

Ninth. It is agreed that all differences and disputes resulting from the operation 
of this contract shall be settled by arbitration. 

PLAN NO. 9. 

Under the following plan employees, aside from participating in 
one-fourth of the net profits over and above a specified return on 
the investment, are also permitted to invest their small savings in 
the business and receive dividends on their investment equal to the 
dividends paid on the other capital invested. For the latter purpose 
the company issues at par to its employees so-called profit-sharing 
certificates in denominations of $50 under the following conditions: 
Certificates are to draw interest at the rate of 6 per cent per annum, 
payable semiannually, and to be subject to redemption and recall, 
upon the. written notice of the corporation to the owners, at par, 
plus interest at 6 per cent from date of last interest payment. The 
certificates must be surrendered by employees whenever they ter- 
minate their connection with the company. 

In addition to the rate of interest upon the so-called profit-sharing 
certificates, the holders of such certificates and all other employees of 
the company as well, provided they have been in the service of the 
company continuously at least six months, are to share in the net 
profits of the business, the profit-sharing fund to be determined as 
follows: After paying all the legitimate expenses of the business, in- 
cluding a dividend of 10 per cent on the total capital invested and 
on the surplus account, arid after paying the above-mentioned per- 
centage on the so-called profit-sharing certificates, the remaining net 
profits are to be distributed among the following participating ac- 
counts in the proportion that each of these is to the aggregate amount 
of the accounts that are to participate: (1) Total capital invested, 
(2) surplus account, (3) total amount of outstanding profit-sharing 
certificates, and (4) wages and salaries of profit-sharing employees. 

The basis of the issue of the above-mentioned certificates is de- 
termined in each and every instance by the management. Such 
certificates may be acquired only for cash, and this in practice limits 
the amount for which an employee may subscribe. Employees hold- 
ing such certificates receive double shares in the divisible profits, as 
holders of certificates on the value of such certificates and as partici- 
pating employees on the basis of their earnings. All shares are paid 
in cash. 

The plan was put into operation as of the business year ending 
February 18, 1914. The distribution of the first year was made 






54 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

exclusively on the basis of earnings, inasmuch as no profit-sharing 
certificates were as yet issued. A profit-sharing dividend of 20 per 
cent on the annual earnings of the participants was paid at the end 
of this year. No profits were available for distribution during the 
second year, but a substantial distribution is expected at the end 
of 1916. 

PLAN NO. 10. 

The establishment in which profit-sharing plan designated as No. 
1 has been in operation for several years had in 1914 an average num- 
ber employed of over 7,000 and is the largest establishment having a 
profit-sharing plan. Under the plan, eligible employees receive a 
share of the profits equal to one-third of the dividend paid on the 
common stock of the company over and above 10 per cent. It is 
apparent, therefore, that in a business earning smaller profits the 
application of the principle of this plan could hardly result in the pay- 
ment of considerable amounts to the participating employees. 

The wage-dividend (profit-sharing) plan of this company, as stated 
by the secretary of the welfare fund of the company, is as follows: 

The plan is based on the assumption that dividends to common 
shareholders up to 10 per cent are the equivalent of the employee's 
fixed wage and that cash dividends in excess of that figure may be 
fairly considered as extraordinary. The plan devised, therefore, pro- 
vides that the dividend to wage earners shall be based upon such 
extra cash dividends paid to shareholders. In arriving at the pro- 
portion (in the absence of any established standard) all of the factors 
bearing upon the problem, including length of service, have been 
taken into consideration, and it has been finally decided to fix the 
percentage of the wage dividend at 35 per cent of the percentage of 
the extra cash dividends paid to holders of common stock, same to 
be divided and applied on a period of five years. 

The extra cash dividends paid to holders of common stock in the 
year 1914 having been 20 per cent instead of 30 per cent, as illustrated 
below, the wage dividend rate was reduced proportionately from 2.1 
per cent to 1.4 per cent. 

Only employees who are on the pay roll at the time the wage 
dividend reports are prepared and who worked the full calendar year 
preceding the payment of the dividend are considered, and continuous 
service only is recognized. That is to say, any employee who during 
the previous five years left and reentered the service of the company 
participates only from the time of reentry. Fractions of years over 
one year are counted. Pieceworkers participate on the same basis 
as those receiving fixed wages or salaries. Bonuses paid for efficiency 
are counted as wages, but payments from the welfare fund are not 
so treated. 

No person having authority to engage labor for the company is 
permitted, in fixing wages, to take into account any wage dividends 
which may have been or may be received by the employee. 

The trial of this plan does not commit the company to its contin- 
uance, but it may be assumed that if it is continued the wage divi- 
dend will be proportioned to the extra cash dividends paid on com- 
mon stock. 






PROFIT SHARING IN THE UNITED STATES. 55 



The following is an illustration of the method employed in deter- 
mining amounts of individual shares: 

In 1911 the common-stockholders of the company received a 30 
per cent dividend over and above the stipulated 10 per cent. Thirty- 
five per cent of the amount representing this additional 30 per cent 
dividend was then set aside for purposes of profit sharing — for labor 
dividends, as the company calls them. Thirty-five per cent of 30 is 
10.5, the dividend on wages paid to employees with the longest term 
of service — five years and over — that is, such employees received as 
their labor dividend an amount equal to 10.5 per cent of their com- 
bined earnings for the five years preceding and including the distri- 
bution year. The amount in labor dividends paid to employees with 
the shortest length of service eligible under the plan — one year — 

10 5 
was — -J— , or 2.1 per cent, as no emplovees with a record of service 

5 
shorter than one year are eligible for participation. An employee 
who was in the service 1 year and 10 months and has earned, for 
instance, $400 in the first period and $500 in the second, although 
not receiving anything on the earnings of the first 10 months before 
becoming eligible, gets a dividend after the second period on the 
earnings of both periods, that is, on $400 and $500, or on a total of 
$900. 

The highest amount upon which dividends may be paid during any 
one year is the aggregate earnings of the employee during the last 
five years, including the distribution year. 

Aside from the minimum qualification of length of service, em- 
ployees, in order to participate in the labor dividend, must comply 
with the following conditions: (1) Appear on the fist of those in 
employ of the company on December 31 of the distribution year; 
(2) appear on the final dividend list on March 1 of the year following 
the distribution period ; and (3) be in the employ of the company on 
the distribution day, July 1, following December 31 of the distribution 
period. 

The percentages of the total employed that received profit-sharing 
dividends under this plan were as follows: In 1911, 63 per cent; in 
1912, 57.6 per cent; in 1913, 67.2 per cent; and in 1914, 88 per cent; 
the dividends on earnings paid during the same years having been 
7.2 per cent, 6.9 per cent, 7 per cent, and 5 per cent, respectively. 
Over 85 per cent of all the participants in 1914 were engaged in 
mechanical and manual work. The cost of the plan to the company, 
in terms of a percentage of the pay roll of the organization, was: In 
1911, 5.2 per cent; in 1912, 4.9 per cent; in 1913, 5.1 per cent; and 
in 1914, 4.1 per cent. 

The table following shows the total number employed and the 
number and per cent participating for each year since 1911 . 



56 



BULLETIN OF THE BUREAU OF LABOR STATISTICS. 



Table 20.— NUMBER AND PER CENT OF EMPLOYEES PARTICIPATING IN THE PROFIT- 
SHARING, BY YEARS, 1911 TO 1914. 



Year. 



1911 
1912 
1913 
1914 



Total em- 
ployees. 



6,349 
8,177 
8,447 
7,348 



Employees partici- 
pating in profits. 



Number. 



4,001 
4,712 
5,-676 
6,466 



Percent. 



63.0 
57.6 
67.2 
88.0 



The above table snows that the proportion of beneficiaries under 
the plan of this company has been on the increase since 1911 with the 
exception of one year, 1912, when the proportion participating 
decreased by about 6 per cent. 






PLAN NO. 11. 



The shares of profits paid to employees under plan No. 11 depend 
upon: (1) Dividends over and above 6 per cent declared on capital, 
and (2) length of continuous service of the employees, employees 
with a service record of three years or more receiving the maximum — 
a dividend on wages equal to the extra dividend paid on capital. 
Employees in service less than six months do not participate in the 
benefits of the plan. 

The following are the essential features of this plan as originally 
announced to the employees on January 1, 1915: 

There will be allowed 6 per cent interest on the capital stock. 

After the above 6 per cent interest on capital stock has been paid, 
all cash dividends will be divided between stockholders and employees 
as follows : 

All employees who have been in the service of the company con- 
tinually for three years or more, same percentage as to stockholders. 

All employees in the service for two years but less than three years, 
two-thirds of the rate of cash dividends. 

All employees in the service for six months but less than two years, 
one-third of the rate of cash dividends. 

Dividends to employees will be based on the total amount of wages 
paid each employee for the year ending December 31. 

This will apply to all persons in any department or capacity who 
have served the company six months or over within the year except 
those dismissed or discharged. 

Employees voluntarily leaving the service of the company, or 
dismissed or discharged, will forfeit their right to share in any 
dividends. 

Should employees be laid off owing to lack of work, they will be 
entitled to their share of the dividends based on the wages received 
by them during the year. 

In the announcement of the plan it was specifically stated that 
"the directors reserve the privilege to change this plan as they may 
consider advisable for the best interests of the organization." 



PROFIT SHAKING IN THE UNITED STATES. 57 

Over nine-tenths of all employed participated in the distributed 
profits at the end of the first year's operation of the plan. Eighty- 
eight per cent of all the participating employees belonged to mechan- 
ical and manual occupations and were engaged in the actual processes 
of manufacturing. The average profit-sharing dividend on wages paid 
at the end of the year was 6.9 per cent, the cost of the plan to the 
management having been 6.2 per cent of the total pay roll of the 
establishment. 

PLAN NO. 12. 

Plan No. 12 represents a phase of profit sharing that, in view of 
the tendency manifested of late by employers to engage in so-called 
welfare work, is apparently destined to become more and more popular 
among them. Plans such as this are technically known as " deferred 
profit sharing, " because the payments of the individual shares are 
deferred in order to accumulate an amount sufficient to constitute a 
pension for the participant after the expiration of a certain period 
of service. The pensions accumulating under such plans, however, 
are contributory, inasmuch as one of the main prerequisites for par- 
ticipation is that the participating employee deposit with the com- 
pany, at regular intervals and for a certain specified length of time, 
stipulated amounts, these amounts in conjunction with the profit- 
sharing fund of the company being deemed sufficient to constitute 
at the end of a specified period a moderate pension for the employee. 

The plan, which was established in 1916, provides that, subject to 
restrictions, employees may contribute 5 per cent of their monthly 
salary and the firm will contribute 5 per cent of its earnings (without 
reduction for dividends paid to stockholders) to a fund held by trus- 
tees, who will invest the money and have general administration of 
its benefits. The following is the text of this plan in full : 

PURPOSE. 

In order that employees may share in the profits of this business, and to encourage 
the habit of saving, the company has decided to contribute annually a sum equal to 5 
per cent of its net earnings (without deduction of dividends to stockholders), as shown 
by the annual audit of its books, to an employees' savings and profit-sharing fund, as 
explained below, which will go into effect commencing July 1, 1916. 

It is intended that this plan will furnish to those who remain in the employ of the 
company until they reach the age when they retire from active service a sum sufficient 
to provide for them thereafter, and that even those who achieve a long service record, 
but who may not remain with the company all of their business life, will have ac- 
cumulated a substantial sum. This savings and profit-sharing fund will enable an 
employee to secure an income for himself after the close of his active business career 
or, in case of his death, for his family. 

ELIGIBILITY. 

1. Participation will be entirely voluntary. 

2. Every employee of Co., regardless of position, will, after three years of 

service, be eligible to participate in this fund, so long as he remains an employee. 






58 BULLETIN OP THE BUEEAU OF LABOR STATISTICS. 

CONTRIBUTIONS TO THE FUND. 

1. An employee in order to participate must deposit in the fund 5 per cent of his 
salary. The company will contribute a sum equal to 5 per cent of its net earnings 
(without deduction for dividends paid stockholders) , as shown by the annual audit of 
its books. As this fund starts July 1, the company will for the year 1916 contribute 
5 per cent of one-half of the profits of the entire year. 

2. No employee may deposit more than 5 per cent of his salary, and in no case more 
than $150 per annum; this limit being deemed advisable so that the higher salaried 
employees may not too largely participate in the fund. 

PARTICIPATION IN THE PROFITS. . 

1 . The contributions of the company will be made annually as soon after the first of 
each year as an audit of the books will permit, and will be credited pro rata to partici- 
pating employees in the proportion which the amount deposited by each employee 
during the preceding year for which the company has contributed bears to the total 
amount deposited by all employees during such year. 

2. So that every employee eligible to participate may have ample opportunity to 
carefully consider its advantages and to enter at its inception, all those joining prior to 
September 1, 1916, may, by paying into the fund 5 per cent of their salary from July 1, 
1916, share in the fund from its inception as of July 1, 1916. 

WITHDRAWALS. 

1. A depositor who has completed 10 years of service will be entitled to withdraw all 
money credited to his account, including the company's contributions. 

2. A depositor who has not completed 10 years of service will be entitled to withdraw 
only the amount he has deposited, plus interest at 5 per cent per annum, compounded 
semiannually, and no more; except in the case of a woman depositor who, after five 
years' service, leaves to become married, in which case she will be entitled to her 
full share in the fund, including the portion contributed by the company; and ex- 
cept in the case of the death of a depositor while in the service of the company, in 
which case his estate will be entitled to the full amount credited, including the con- 
tributions of the company, and the money due will be paid to his legal representatives. 

3. A depositor shall withdraw upon ceasing to be an employee of the company, or 
upon failing to regularly make his deposit. 

4. A depositor who once withdraws can not reenter the fund. 

5. In any case of withdrawal where a depositor is entitled to share in the contribu- 
tions of the company, he will receive the full amount to his credit, as shown by the 
accounting for the preceding year, plus interest at the rate of 5 per cent per annum 
and plus such sums as the depositor may have deposited since December 31 of the 
preceding year, with interest at 5 per cent per annum. 

6. Loans will be made to depositors in cases of actual necessity and when in the 
opinion of the trustees the circumstances warrant'it. 

MANAGEMENT. 

1. The fund will be handled, intrusted, and invested under the direction of a board 
of five trustees, to be selected by the board of directors of the company, three to be 
officers or directors and two employees (not officers or directors) of Co. 

2. It is intended that so far as practicable and advisable the fund will be invested 
in shares of stock of the company, to the end that the depositors may, in the largest 
measure possible, share in the earnings of the company. 

3. The board of trustees may, from time to time, 'adopt rules to carry out the pur- 
poses of this plan, and may adopt amendments to the plan; but no change shall be 
made in the plan as above outlined unless the same is ratified by the vote of a majority 
of the depositors. All questions of interpretation of this plan, or amendments thereto, 



PROFIT SHAKING IN THE UNITED STATES. 59 

or the rules pertaining thereto, or relating to any matter of accounting, values, profits, 
or any other matters or differences which may arise, shall be determined solely by the 
board of trustees, and the decision of the board shall be final and conclusive upon all 
concerned. 

DISCONTINUANCE . 

The fund may be discontinued at any time by announcement of the company, 
made at least six months before its final yearly contribution. After such announce- 
ment no new depositors will be eligible to join, and upon the payment into the fund 
of such final contribution the fund shall be distributed among all the depositors pro 
rata in proportion to their interests as ascertained by the board of trustees. 

LIMITED PROFIT-SHARING PLANS. 

DESCRIPTIVE AND STATISTICAL SUMMARY OF A SELECTED GROUP. 

The number of establishments sharing some proportion of their 
profits with a few of their more important employees is known to be 
very large. Very frequently such profit sharing serves as a satis- 
factory automatic substitute for increases in the salaries of those 
in immediate charge of the operation of the business, for the pur- 
pose of offering them substantial inducements to remain in the 
service. In view, however, of the relatively small number of people 
affected by such plans it was deemed sufficient to limit the study of 
this phase of profit sharing to an intensive examination of a selected 
group of such plans, the basis of selection having been the relatively 
large (for limited profit-sharing plans) sphere of application, the 
greater part of the plans examined extending their benefits to the 
bulk of the executive, administrative, and supervisory employees, 
and in some instances also to a part of the higher paid employees of the 
manufacturing force. 

THE DETERMINATION OF THE PROFIT-SHARING FUND. 

The method of determining the proportion of the net profits to 
be distributed varies greatly under the limited profit-sharing plans 
studied, the usual practice prevailing, in over one-half of those ex- 
amined, being the setting aside, at the discretion of the employer, of 
an arbitrary percentage of the profits after meeting all the legitimate 
expenses, including interest on the investment. The specific propor- 
tion of the profits thus set aside for the benefit of the employees 
varies greatly with the individual plans, its range of variation being 
from one-twentieth to one-half, with an approximate average of 
about one-fifth for the entire group of plans. 

Under two plans dividends on wages varying with the amounts of 
net profits of the firm are paid. Under one plan the divisible fund 
is arrived at in the following manner: After meeting all the legiti- 
mate expenses of the company, including a dividend of 4 per cent on 
the preferred and of 6 per cent on the common stock, the surplus earn- 
ings are divided among three so-called participating accounts, as 
follows: (1) Account of bonus fund for employees (profit-sharing 









60 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

fund); (2) account of dividends; and (3) account of sinking fund. 
The proportionate share of the surplus profits going to each of the 
three mentioned accounts is as each single or participating account 
is to the total of all participating accounts. The specific instances 
covered by these accounts are : Total wages of participants, amount 
of dividends paid, and amount to be allowed for depreciation, respec- 
tively. 

Under another plan the divisible fund consists of the aggregate of 
dividends accruing on a specific number of shares of the capital stock 
of the company, set aside for that purpose, the shares themselves 
remaining all the time the property of the concern. Still another 
specifies a minimum amount of net profits that is to be earned before 
specific amounts (on a scale announced in advance) become available 
for profit-sharing purposes, the amounts distributed varying with 
the profits of the business over and above the stipulated minimum. 

As a rule, the relative proportion of the profits available for 'dis- 
tribution under these plans seems to be considerably larger than 
under the profit-sharing plans described in the preceeding pages of 
this report. This relative liberality of employers, coupled with the 
fact that the numbers of those participating are much smaller, 
account for the larger benefits accruing to the beneficiaries of the 
limited profit-sharing plans. Such results are naturally to be 
expected in view of the fact, mentioned elsewhere, that one of the 
principal objects of the limited profit-sharing plans is to furnish a 
method that would tend to encourage the more important policy- 
forming, executive, and supervisory employees to remain in the 
service of their respective emplojws permanently. 



CONDITIONS OF ELIGIBILITY. 



Seven, or slightly over 40 per cent, of 17 limited profit-sharing 
plans examined specify a minimum length of service — from one to 
H\e years — as a condition for participation. Almost all the plans 
bar from participation the wage-earning or manual workers, con- 
fining the benefits of the plan primarily to their executive, super- 
visory, and commercial employees, including in a few instances the 
regular clerical force. 

One of the plans confines its operation to "employees of the com- 
pany who have authority to formulate policies, make commitments, 
engage employees, and approve expenditures." The merit of 
service as established by the judgment of the employer seems to be 
one of the factors prerequisite to participation in a great majority 
of these plans. Two of the plans specify that only employees earn- 
ing $100 per month be allowed to participate; one confines its opera- 
tion to "all employees, except pieceworkers, with an earning capacity 
of at least $780 per year." 



PROFIT SHARING IN THE UNITED STATES. 61 

BASIS FOR COMPUTING INDIVIDUAL SHARES. 

In the majority of the plans — those in operation in the smaller 
establishments mostly— the prospective beneficiary is informed in a 
general w,ay of the method by which his individual share of profits 
will be computed. In a considerable number of the remaining plans, 
however, those chiefly in operation in organizations of considerable 
size, the method of determining the individual shares is unknown to 
the employees, such shares being determined usually by a special 
committee appointed by the management, individual shares varying 
with the reported efficiency as well as with the relative importance 
of the positions held by the prospective beneficiaries. Under such 
plans beneficiaries sometimes, under the penalty of dismissal or loss 
of favor with the company, are enjoined from communicating to each 
other the amount of their respective shares. 

In only six of the plans are individual shares of profits based wholly 
upon salaries or earnings. 

CONDITIONS OF FORFEITURE. 

In every one of the limited profit-sharing plans examined dis- 
charge and voluntary leaving of employment act as automatic causes 
for forfeiture of profits of the current year. In one instance volun- 
tary leave causes forfeiture of 25 per cent of the share of profits of 
the previous year, in addition to profits of the current year. 

DISPOSITION OF FORFEITURES AND FORM OF PAYMENT. 

Twelve of 17 limited profit-sharing plans examined specifically 
provide that amounts of forfeited shares be distributed among the 
other participating employees. Under four plans, or less than one- 
fourth of all studied, in view of the fact that profit sharing under 
them takes the form of a percentage dividend on earnings (a prin- 
ciple that does not involve the setting aside in advance of a definite 
amount for profit-sharing purposes), forfeited shares revert to the 
company. The remaining plans in most instances make no specific 
provision with reference to the disposition of forfeited shares, all 
of them reporting that "each case is settled on its own merits." 

Under the limited profit-sharing plans investigated, as under the 
profit-sharing plans described above, shares of profits, in the majority 
of instances, are paid in cash. This is true of 10 of 17 plans ex- 
amined. Of the remainder, in 4, or 23.5 per cent, they are paid 
wholly in stock, and in three, or 17.6 per cent, in part stock or savings 
account and part cash. As in 2 of the latter not less than half 
of each share is paid in stock, the prevailing forms of payment under 
the limited profit-sharing plans for all practical purposes may be 
stated to be about 60 per cent all in cash and the remainder, 40 per 
cent, in stock. 



62 



BULLETIN OF THE BUREAU OF LABOR STATISTICS. 



Those of the limited profit-sharing plans under which shares of 
profits are paid in full or in part in stock were apparently designed for 
the purpose of inducing the more valuable employees to remain in the 
service as long as possible. That this was the intention of the man- 
agement may be inferred from the provisions specifying conditions 
under which the stock in which the profits are paid may be disposed 
of by the beneficiaries. Thus in two plans the selling .of the profit- 
sharing stock by. an employee disqualifies him from further partici- 
pation in the benefits of the plan. In one plan the profit-sharing 
stock is not transferred to the employee for a period of at least five 
years after distribution and in still another the stock due to the em- 
ployee is .transferred to him gradually, 25 per cent after the first year, 
25 per cent after the second, and the remainder after the third. 

YEARS IN WHICH THE LIMITED PLANS WERE ESTABLISHED. 

The following table shows the years in which 17 limited profit- 
sharing plans studied in this report were established : 

Table 21.— YEARS IN WHICH THE LIMITED PROFIT-SHARING PLANS WERE 

ESTABLISHED. 



Year. 1 


Number 
of plans. 


Year. 


Number 
of plans. 


1900 


1 
3 
1 
1 
1 
1 


1912 


4 
1 
2 
2 


1905 . 


1913 


1906 . 


1914 


1909 . 


1915 


1910 


Total 


1911 


17 





As can readily be seen from the above table, none of the plans 
date back prior to 1900. Over one-half of them have come into 
existence during the last four years. 

LOCATION OF LIMITED PROFIT-SHARING ESTABLISHMENTS. 

The geographical location of the establishments in which the plans 
studied were in operation is shown in the following table : 

Table 22.— LOCATION OF LIMITED PROFIT-SHARING ESTABLISHMENTS. 



State. 


Number 
of estab- 
lishments. 


State. 


Number 
of estab- 
lishments. 


Indiana 


2 
2 
1 

1 
7 


Ohio 


3 


Massachusetts 


Pennsylvania . 
Total. . 




1 


Michigan 






New Jersey 


17 


New York 











As in the case of the profit-sharing plans described elsewhere in 
this report, the bulk of the limited profit-sharing plans examined — 
considerably more than one-half— were in operation in establishments 
located in a very small number of North Atlantic States. 



' 



PEOFIT SHARING IN THE UNITED STATES. 
INDUSTRY OR BUSINESS OF LIMITED PROFIT-SHARING ESTABLISHMENTS. 



63 



The nature of the industry or business of the establishments with 
limited profit-sharing plans is as follows: 

Eleven of 17 limited profit-sharing plans examined were found in 
establishments engaged in manufacturing; 2 in mercantile establish- 
ments; 2 in establishments of building contractors; and 2 were un- 
classified. 

SIZE OF LIMITED PROFIT-SHARING ESTABLISHMENTS. 

In the table presented below is shown the size of the establish- 
ments in which the 18 plans examined were in operation, as indi- 
cated by the average number employed during a representative 
distribution period: 

Table 23.— NUMBER OF LIMITED PROFIT-SHARING ESTABLISHMENTS HAVING EACH 
CLASSIFIED NUMBER OF EMPLOYEES. 



Classified number of employees. 


Number 
of estab- 
lish- 
ments. 


Classified number of employees. 


Number 
of estab- 
lish- 
ments. 


Under 100 


4 
4 
4 
3 


3,000 and under 5,000 


1 


100 and under 300 


5,000 and under 10,000 


2 


300 and under 500 


Total 




1,000 and under 3,000 


18 









Two- thirds of the 18 establishments for which information was ob- 
tained employed less than 500 employees ; nearly half employed less 
than 300; one-third employed 1,000 people or more. 



EXTENT OF PARTICIPATION. 



The proportion of the total employed that participated in the 
distributed profits under the 18 plans examined was as follows: 

Under only two limited profit-sharing plans did the proportion 
participating exceed 40 per cent. 1 In four establishments the pro- 
portion was from 20 to 40 per cent; in two it was 10 and under 20 per 
cent; in five the proportion was 5 and under 10 per cent; and in the 
remaining five establishments less than 5 per cent of the employees 
participated in the benefits of the plans. 

BENEFIT ACCRUING TO EMPLOYEES. 

Below is given a table showing the benefits accruing to the partici- 
pating employees, in terms of per cent of their regular earnings. 

Table 24.— PER CENT OF EARNINGS PAID AS DIVIDENDS IN 16 ESTABLISHMENTS 
HAVING LIMITED PROFIT SHARING PLANS. 



Classified per cent of earnings paid as 
dividends. 


Number 
of estab- 
lish- 
ments. 


Classified per cent of earnings paid as 
dividends. 


Number 
of estab- 
lish- 
ments. 


Under 2 


1 
1 
2 
2 
2 
1 


• 

20 and under 30 


5 


4 and under 6 . . 


40 and under 50 


1 


6 and under 8 . . 




1 


8 and under 10 


Total 




10 and under 15 . . 


16 


15 and under 20 


" 









1 Except for the arbitrary methods of determining the shares of the individual participants these two 
plans might have been classified as pure profit sharing. 



64 



BULLETIN OF THE BTJKEAU OF LABOR STATISTICS. 



In one-half of the plans the profit-sharing dividend on the regular 
earnings of the participating employees was 15 per cent or over. In 
over two-fifths of them it was 20 per cent or more. In over one- 
third of the plans the profit-sharing dividend was less than 10 per cent. 



COST OF PLANS TO EMPLOYERS. 



The following table shows the cost of the plans to the employers 



in per cent of the total pay rolls of their establishments: 



Table 25.— COST OF LIMITED PROFIT-SHARING PLANS TO 16 EMPLOYERS, IN PER- 



CENT OF TOTAL PAY ROLLS FOR ONE YEAR. 






Classified per cent of pay rolls paid as 
dividends. 


Number 
of estab- 
lish- 
ments. 


Classified per cent of pay rolls 
dividends. 

■ 


paid as 


Number 
of estab- 
lish- 
ments. 


Under 1 


1 
6 
5 
1 


6 and under 8 


2 


1 and under 2 


1 15 and under 20 . 


1 


2 and under 4 


Total 




4 and under 6 


16 









In 15 of the 16 establishments the cost was less than 8 per cent on 
the total pay rolls of the respective establishments. In three-fourths 
of the plans it was less than 4 per cent. In one instance only was the 
cost of the plan more than 15 per cent. 

OCCUPATIONS OF PARTICIPATING EMPLOYEES. 

The following table shows the occupation groups of the partici- 
pating employees under 18 limited profit-sharing plans: 

Table 26.— NUMBER AND PER CENT OF PARTICIPATING EMPLOYEES IN EACH OCCU- 
PATION GROUP. 



Occupation group. 


Participating 
employees. 


Number. 


Per cent . 


Executive 


1,078 
272 
171 
532 


52.5 

13.2 

8.3 

25.9 


Clerical 


Sales 


All others 


Total 


2,053 


100.0 





The table shows that 74 per cent of all the participating employees 
belonged to the group of executive, clerical, and sales occupations. 
As would be expected in establishments with limited profit sharing, 
more than half of the participants belonged to the executive force. 
Only 25.9 per cent were in the group "all others," which includes the 
mechanical and manual occupations. 






PROFIT SHAKING IN THE UNITED STATES. 



65 



DETAILED TABLES. 

The principal part of the data which is shown in summary form in 
the preceding tables of this section of the report is shown in detail 
in the two tables which follow. 

Table 27.— NUMBER OF EMPLOYEES, PROPORTION PARTICIPATING IN PROFITS, DIV- 
IDENDS TO EMPLOYEES, AND COST OF PROFIT-SHARING PLANS TO EMPLOYERS, 
IN 18 ESTABLISHMENTS HAVING LIMITED PROFIT-SHARING PLANS. 



Es- 

tab- 

lish- 

ment 

No. 



10 
11 
12 
13 



Dividend period 
ending — 



Dec. 31, 1913 . 
Dec. 31, 1914 . 

June 30, 1914 . 
June 30, 1915 . 

Dec. 31,1911- 
Dec. 31,1912. 
Dec. 31,19142 

June 30, 1911 - 
June 30, 1913 *. 
June 30, 1914 . 
June 30, 1915 . 

Dec. 31,1914. 

June 30, 1913 . 
June 30, 1914 . 

Dec. 31, 1912 . 
Dec. 31, 1913 . 
Dec. 31, 1914 . 
Dec. 31,1915. 

Junel, 1911 .. 
June 1,1912.. 
June 1,19145. 
June 1, 1915 . . 

Dec. 31, 1909 . 
Dec. 31, 1910. 
Dec. 31, 1911 . 
Dec. 31,1912. 
Dec. 31, 1913 . 
Dec. 31, 1914 . 
Dec. 31, 1915 . 

Dec. 31, 1912 . 

Dec. 31, 1914 . 

Feb. 1,1916.. 

Dec. 31, 1907 . 
Dec. 31, 1908 . 
Dec. 31, 1909 . 
Dec. 31, 1910 . 
Dec. 31,1912 6 
Dec. 31,1913. 
Dec. 31, 1914 . 

Junel, 1915.. 

Dec. 31, 1915 . 

Dec. 31, 1914 . 

Dec. 31, 1914 . 

Dec. 31, 1914 . 



Aver- 
age 
num- 
ber 
of 
em- 
ploy- 
ees. 



3,414 
3,354 

2,271 
2,686 

251 
292 
339 

225 
325 
275 
225 

206 

8,716 
9,300 

2,700 
2,700 
2,700 
2,700 

1, 778 
1,767 
1,678 
1,612 

0) 
0) 
C 1 ) 
0) 

(!) 

410 
400 

456 

38 

225 

0) 
0) 
(0 

15 

18 
19 

115 

70 

67 

9,645 

448 



Employees 
participat- 
ing in 
profits. 



Num- 
ber. 



72 
75 

153 
139 

5 
5 
5 

13 
14 
13 

14 

46 



837 


9.6 


860 


9.2 


190 


7.0 


202 


7.5 


210 


7.8 


228 


8.4 



39 
37 
33 
38 

12 
12 
12 
145 
151 
180 
180 

38 

11 

29 

3 
4 
4 
4 
4 
4 
4 

4 

7 

31 
271 

91 



Per 

cent 

of 

total. 



2.1 
2.2 

6.7 
5.2 

2.0 

1.7 
1.5 

5.8 
4.3 
4.7 
6.2 

22.3 



2.2 
2.1 
2.0 
2.4 

( l ) 

0) 

(') 

43.9 
45.0 

8.3 

28.9 

12.9 

0) 
0) 

26.7 
22.2 
21.1 

3.5 
10.0 
46.3 

2.8 
20.3 



Total 
pay roll. 



$2, 842, 116 
2,941,671 

2,112,061 
2, 531, 519 

160, 983 
182, 502 
213, 071 

202,927 
296, 130 
251, 730 
203, 145 

202, 208 

6, 719, 276 
7, 216, 843 

1,995,980 
2, 025, 955 
2, 028, 297 
1, 968, 560 

725, 572 
711, 306 
816, 338 
802, 632 

C 1 ) 

(!) 

0) 

(!) 

0) 

355,000 
350,000 

374, 870 

25, 773 

171, 887 

0) 

0) 

0) 

0) 

18, 841 

26,502 

28, 242 

78,906 

0) 

104, 168 

8, 283, 426 

336, 120 



Pay roll of 
participants. 



Amount. 



$311,000 
352, 500 

0) 

272,340 

10, 080 
11,184 
11,900 

21, 057 
21,614 
24, 768 
26,289 

68,863 

1, 048, 259 
1, 052, 538 

453, 027 
513,754 
511, 160 
517, 289 

52, 270 
53,190 
50,150 

58, 672 

8,000 
8,000 
8,500 
45,500 
52,000 
65,000 
65,000 

56,200 

10,504 

50,514 

9,000 
11,200 
12,000 
12,000 
12,900 
12,900 
12,900 

7,800 

19,240 

72, 438 

102, 406 



Per 
cent 
of 
total 
pay 
roll. 



10.9 
12.0 

0) 

10.8 

6.3 
6.1 
5.6 

10.4 
7.3 
9.8 

12.9 

34.1 



Dividends to employees. 



Amount. 



Per 
cent of 
total 
pay 
roll. 



$42, 600 
87,500 

23,098 
43, 693 

2,243 

3,012 

88 

734 
8,941 
3,810 
2,120 

0) 

87,061 
84, 763 

150, 890 
186, 040 

127, 790 

128, 840 

15, 500 

5,200 

13, 100 

12, 100 

2,500 
2,500 
2,500 
6,500 
9,000 
9,200 
9,500 

12, 509 

828 

3,031 

1,662 
1,362 

888 
1,333 

947 
1,582 
1,647 

6,231 

8,862 

20, 140 

271, 166 

5, 000 



Per 
cent 
of pay 
roll of 
partic- 
ipants. 



1.5 
3.0 

1.1 
1.7 

1.4 
1.7 
( 3 ) 
.4 
3.0 
1.5 
1.0 

0) 

1.3 
1.2 

7.6 
9.2 
6.3 
6.5 

2.1 

.7 

1.6 

1.5 

0) 
0) 
0) 

$ 

C 1 ) 
2.6 
2.7 

3.3 

3.2 

1.8 
0) 

0) 
0) 
0) 

5.0 
6.0 
5.8 

7.9 

0) 

19.3 
3.3 
1.5 







13.7 
2J.8 

0) 
16.0 

22.3 

26.9 

.7 

3.5 
41.4 
15.4 

8.1 

0) 

8.3 

8.1 

33.3 
36.2 
25.0 
24.9 

29.7 

9.8 

26.1 

20.6 

31.3 
31.3 
29.4 
14.3 
17.3 
14.2 
14.6 

22.3 

7.9 

6.0 

18.5 
12.2 

7.4 
11.1 

7.3 
12.3 
12.8 

79.9 

46.1 

27.8 

(') 

4.9 



1 Not reported. 

2 No distribution made in 1913. 

3 Less than one-tenth of 1 per cent. 

56831°— Bull. 208—17 5 



* No distribution made in 1912. 
6 Data for 1913 not reported. . 
6 No distribution made in 1911. 



66 



BULLETIN OF THE BUREAU OF LABOR STATISTICS. 






Table 28.— NUMBER OF EMPLOYEES, PROPORTION PARTICIPATING IN PROFITS, AND 
NUMBER AND PER CENT OF PARTICIPANTS IN EACH SPECIFIED OCCUPATION 
GROUP, IN 18 ESTABLISHMENTS HAVING LIMITED PROFIT-SHARING PLANS. 









Aver- 
age 
num- 
ber 
of em- 
ploy- 
ees. 


Employees 

participating 

in profits. 


Occupation groups of participants. 


Es- 
tab- 
lish- 


Dividend period ending- 


Executive. 


Clerical. 


Sales. 


All others. 


ment 
No. 


Num- 
ber. 


Per 

cent 

of 

total. 


Num- 
ber. 


Per 

cent. 


Num- 
ber. 


Per 

cent. 


Num- 
ber. 


Per 

cent. 


Num- 
ber. 


Per 

cent. 


1 


Dec. 31 


1914 


3,354 

2,686 

339 

225 

206 

9,300 

2,700 

1,612 

400 

456 

38 

225 

19 

115 

70 

67 

9,645 

448 


75 

139 

5 

14 

46 

860 

210 

38 

180 

38 

11 

29 

4 

4 

7 

31 

271 

91 


2.2 

5.2 

1.5 

6.2 

22.3 

9.2 

7.8 

2.4 

45.0 

8.3 

28.9 

12.9 

21.1 

3.5 

10.0 

46.3 

2.8 

20.3 


75 

139 

5 

14 

11 

317 

48 

38 

40 

38 

11 

29 

4 

4 

5 

3 

271 

26 


100.0 

100.0 

100.0 

100.0 

23.9 

36.9 

22.9 

100.0 

22.2 

100.0 

100.0 

100.0 

100.0 

100.0 

71.4 

9.7 

100.0 

28.6 














2 


July 1 
Dec. 31 
June 30 
Dec. 31 
June 30 
Dec. 31 
June 1 
Dec. 31 
Dec. 31 
Dec. 31 
Feb. 1 
Dec. 31 
June 1 
Dec. 31 
Dec. 31 
Dec. 31 
Dec. 31 


1915 














3 


1914 














4 


1915 














5 


1914 


30 

140 
37 


65.2 
16.3 
17.6 






5 
373 

7 


10.9 


6 


1914 


30 
118 


3.5 
56.2 


43.4 


7 


1914 


3.3 


8 


1915 




9 


1915 


20 


11.1 






120 


66.7 


10 


1912 








11 


1914 














12 


1916 














13 


1914 














14 


1915 














15 


1915 






2 
11 


28.6 
35.5 






16 


1914 


8 


25.8 


9 


29.0 


17 


1914 




18 


1914 


37 


40.7 


10 


11.0 


18 


19.8 











ANALYSIS OF WORKING OF FIVE TYPICAL LIMITED PROFIT-SHARING 

PLANS. 

As compared with the profit-sharing plans described in the pre- 
ceding sections of this report, the distinguishing feature of the limited 
profit-sharing plans is the limited extent of their application, the 
majority of them having been devised, apparently, either for the 
benefit of the executive and supervisory employees, as in plans 1, 2, 3, 
and 4 described below, or for the benefit of the better paid employees, 
as in plan No. 5. 

Aside from the relatively small proportion of beneficiaries and the fact 
that only the executive and supervisory or better paid employees are 
allowed to participate, these plans in many instances are to be noted 
for the lack of any definitely announced rule for the computation of 
individual shares in the divisible fund. From this point of view plan 
marked No. 1 is considered as typical. Under its provisions none of 
the employees of the company are informed as to the method by 
which their shares will be determined; they are furthermore specifi- 
cally prohibited from communicating to the other employees the 
amounts received by them under the penalty of such an action on 
their part resulting "to the disadvantage of the employee involved." 

As far as it could be ascertained, the main principle guiding the 
determination of individual shares under such plans is that the more 
important the position of the employee, as shown naturally in the 
amount of salary he receives and in the desire of the company to 
retain his services, the larger his proportion in the divisible fund. 
The working of this principle is clearly shown in plan designated as 
No. 3. 



PROFIT SHARING IN" THE UNITED STATES. 67 






PLAN NO. 1. 



This plan has been in operation since 1910 and is applicable only 
to " officers and employees occupying semiofficial positions," mean- 
ing by this classification managers, superintendents, and other im- 
portant employees engaged in " directing the affairs of the company, 
including officers." Not all of the employees engaged in the above- 
mentioned occupations, however, are allowed to participate. The 
plan, as announced, is addressed to "the officers and those occupying 
semiofficial positions — to whom this letter [announcing the plan] is 
officially delivered." 

Although the specific proportion of the profits that is to be dis- 
tributed is announced in advance, the determination of the amount 
of individual shares is left to the discretion of the management. It 
was stated by officers of the company that the amount of individual 
shares depends chiefly "upon the relative importance of the position 
occupied by a specific employee," and the merit of his service, although 
"salaries, in a general way, are taken into consideration," the higher 
the salary the larger, apparently, the share of profits awarded. 

The basis of determining individual shares is not communicated to 
any of the profit-sharing employees. In fact, as stated in the last 
paragraph of the text of the plan reproduced below, "it is the desire 
of the board that there shall not be any discussion among the em- 
ployees as to the amounts received under the distribution," and any 
such discussion coming to the knowledge of the special committee 
"will operate to the disadvantage of the employee involved." 

No profits were available for distribution during 1911 and 1912. 
In 1915, $42,600 and in 1914, $87,500 were distributed. In 1913, of a 
total of 3,414 employed, 72, or 2.1 per cent, shared in the distributed 
profits. In 1914, 2.2 per cent of the total employed benefited by the 
operation of the plan. The profits distributed amounted to 13.7 per 
cent of the earnings of the participants in 1913 and to 24.8 per cent 
in 1914. The cost of the plan to the company in per cent of the 
total pay roll of the entire organization amounted to 1.5 per cent 
and 3 per cent in 1913 and 1914, respectively. 

The text of this plan is herewith reproduced in full: 

To the officers and those occupying semiofficial positions, and managers of the 

Co. and its subsidiary companies, to whom this letter is officially delivered: 

The company desires those within the above class, upon whose efforts much of the 
success of the business depends and who are engaged in directing and managing the 
affairs of the company and operating the properties, to share with the stockholders in 
any profits made after a certain amount of net earnings shall have been reached . To 
this end the following plan has been adopted: 

Twelve per cent upon the outstanding capital stock of the company is sufficient to 
allow the payment of a 7 per cent dividend whenever that course may be deemed wise 
and the application of a reasonable sum for betterment or toward surplus. It is 
believed that the business is capable of earning a sum each year much in excess of said 
12 per cent. The company proposes to divide among the officers and those occupying 






68 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

semiofficial positions and managers to whom this letter is officially delivered, a per- 
centage of the increased earnings over and above 12 per cent on the amount of the 
capital stock from time to time outstanding, the amount to he thus divided to be 
decided each year by the board of directors. The present intention of the board is 
to distribute a sum (in stock of the company) equal to 25 per cent of the increased net 
earnings of the company over and above said 12 per cent. Said amount to be dis- 
tributed is to be paid out by direction of the board of directors at the end of each year, 
in such amounts and to such persons as a special committee appointed by the board of 
directors shall determine. The distribution recommended by such special committee 
will be made amongst the class above specified and in the proportions fixed by that 
committee. The special committee shall make no award to any member of that com- 
mittee, but if any member thereof shall be within the above class, the amount of the 
award, if any, to such member shall be fixed by the board of directors and not by the 
committee, and such award shall be subject to the same provisions applicable to the 
awards made by the special committee. The stock will be distributed on a basis of 
value to be fixed by the board. In making the distribution one-half will be distributed 
at the end of each year and the other half held in the hands of a trustee or trustees from 
time to time selected by the board of directors; and the stock so issued to, or transferred 
to said trustee or trustees, will be delivered to the beneficiary at the end of five years 
from the beginning of the year in which the profits are earned. Each man will receive 
a certificate for his interest, the certificate to recite amongst other things: 

(a) That if he remains continuously in the service of the corporation, or one or 
another of its subsidiary companies, for five years from the beginning of the year in 
which the profits are earned and during all of said time shall have rendered faithful 
and satisfactory service to the company, or one or another of its subsidiary companies 
the stock is to be delivered to him and that he may do as he likes with it after delivery: 

(b) That if he dies or becomes totally and permanently disabled while in the employ 
of the corporation, or one or another of its subsidiary companies, the stock will be 
delivered to his estate or to him; 

(c) That he can draw the dividends declared on the stock while it is held in trust 
for his account and he remains in the employ of the corporation, or one or another 
of its subsidiary companies, until such shares have been delivered to the participant 
or shall have been forfeited as herein provided; 

(d) That if, without the consent of the corporation, for any cause, he shall have 
quitted the service of the corporation, or one or another of its subsidiary companies, 
except as provided in (6), or shall be discharged, and except when voluntary retire- 
ment may be made under any general pension scheme which may hereafter be 
adopted, he shall forfeit all right to said stock, and in such case it will be held in a 
fund which at the end of five years from the beginning of the year in which the profits 
are earned will be divided among such of the above-mentioned class of the series of 
that year as shall have complied with all the conditions; 

(e) That neither it, nor any right thereunder, shall be assignable or transferable by 
the beneficiary, nor shall same be encumbered either by act of the party or by opera- 
tion of law without the written consent of the company, and in the event of the viola- 
tion of this provision he and his successors in interest shall forfeit all right to said stock 
and every right thereunder, if the corporation at any time shall so elect. Provision 
against assignment by operation of law shall not be deemed to prohibit beneficiary's 
estate from receiving the stock if he dies while in the employ of the corporation. 
Until such time as the stock is issued in the name of the certificate holder and delivered 
to him, he shall have no interest therein which will entitle him to vote thereon, but 
the voting power under said stock, if any, may be exercised by the trustee or trustees. 

Thus 50 per cent of the amount set aside in this profit-sharing plan for one year will 
be held in the shape of stock and will be given only to such of the members of that 



PROFIT SHARING IN THE UNITED STATES. 69 

series, and at the end of the period next mentioned, as shall have been continuously 
in the employ of the company, or one or another of its subsidiary companies, for five 
years from the 1st day of January of the year in which such profits are earned. 

The board in carrying out this plan may decide to make the distribution so that as 
to the one-half distributed at the end of the year the employee may receive all cash 
or all stock, or part in each, and the other half that is to be received and held by the 
trustees may be all cash or all stock, or part in each. Neither the company nor any 
trustee shall be required at any time to deliver any fractional share of stock, but the 
trustee or trustees shall have the right and will for any fractional share to which the 
participant would appear to be entitled and which may not be delivered to the partici- 
pant at the time the stock is deliverable, pay to the participant in cash the pro rata 
price for the fraction of a share not delivered, computed on the price per share which 
the trustee or trustees paid for the stock. The trustees shall be authorized to sell and 
transfer the said stock and to invest and reinvest same as they may elect, subject to 
the approval of the board of directors, and the certificate of interest herein mentioned, 
and ail the provisions thereof shall be deemed to apply as well to such cash or securities, 
if any, in the hands of the trustees, as it does or would have applied to stock of the 
company. 

It is not intended to have the distribution made pro rata according to salaries 
received, but same is to be made as a reward for efficient services. Profits obtained 
by individual departments, reduction of cost at the factories, closing of contracts of 
special importance, harmonious relations with other branches, and all other matters 
of benefit to the company will be taken into consideration by the special committee. 

Applicants for the benefits of this plan shall sign and forward to the treasurer of the 

Co., a form which is herewith inclosed, in which the party states that it is his 

intention to remain permanently with the company, or one or another of its subsidiary 
companies, and that he will use every possible endeavor to maintain harmonious 
relations with other branches, and to unify the company's interests and to increase in 
every legitimate way its profits, both in his own department and by suggestion where 
it may benefit departments other than his own. This form will insure all of the names 
of those eligible to participate being before the special committee at the distribution 
period. 

While it is the purpose of the company to inaugurate for the 1913 series the foregoing 
plan on April 1, 1914, treating the year in which the share of profits will be computed 
as commencing January 1, 1913, and will probably continue this plan annually there- 
after with new series, from each January 1, it has been thought best not to have 
this arrangement in any year take any form which would create a contract obligation 
on behalf of the company, prior to or except as the delivery of stock or certificates of 
interest create same, and therefore this plan is one merely of a declaration of intention. 

The question of what constitutes profits shall be determined solely by the board of 
directors. 

None of the class above mentioned and none sharing in the distribution, nor anyone 
in anywise interested under this plan, shall have any right to demand an accounting, 
and the distribution to be made by the special committee is to be made wholly within 
its discretion, subject to ratification by the board of directors, and no right attaches to 
the fund or any share in it on the part of an employee, and the committee reserves the 
right to withhold participation in part or entirety from anyone, the selection of par- 
ticipants resting solely upon the judgment of the committee, and all other questions 
affecting the applicants or rights of certificate holders shall be determined solely and 
finally by the special committee as it may from time to time be constituted by direction 
of the board of directors, and its rulings must be accepted as conclusive. 

It is the desire of the board that stock so distributed shall not be sold but shall be 
held by the- employee as his own, thereby increasing his interest in the welfare of the 



70 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

company, and any sale of such stock will be considered a matter of bad faith, and will 
militate against the employee in any distribution in a subsequent year. 

It is also the desire of the board that there shall not be any discussion among the 
employees as to the amounts received under the distribution, and any such discussion 
coming to the knowledge of the special committee will operate to the disadvantage of 
the employee involved. 

Neither this plan nor anything growing out of it shall be construed to be a contract 
of employment. 

PLAN NO. 2. 

Plan No. 2 seems to be in a class by itself. Unlike most of the 
plans, profit sharing, bonus or gain sharing or otherwise, described 
in this report, its main provisions are embodied in the articles of 
incorporation of the company of 1911. Under these articles the 
authorized capital of the company is divided into first preferred stock 
($4,500,000), second preferred stock ($50,000), and industrial part- 
nership stock ($1,050,000). 

First preferred stock consists of all converted common stock, carries 
a fixed cumulative dividend with preference in assets and dividends, 
but no rights to accretions. The rate of dividend (8 per cent) was 
chosen to represent what was considered a fair return on the capital, 
at the time of reincorporation, invested in the concern. 

Any profits remaining after these dividends have been fully paid 
are invested in the business, and against them is issued yearly the 
so-called industrial partnership stock. 

Only to "principal employees," such as sales managers, senior 
salesmen, department heads, foremen, etc., is industrial partnership 
stock issued. "Principal employees" includes only those who have 
at least seven years of service and an annual remuneration of at least 
$1,200, or six years' service and a remuneration of $1,500, or five years' 
service and a remuneration of $1,800, and who have contracted in 
writing for the stock. Remuneration for overtime work or piece- 
work or commissions is not to be included in the above earnings. 
Individual shares of profit are based exclusively upon the salaries of 
the participating employees. 

To ascertain the amount of net profits to be divided among partici- 
pating employees, termed industrial partners, not less than 6 per 
cent is allowed for depreciation; 8 per cent, cumulative dividend, is 
paid on first preferred stock; next a cumulative dividend at a rate 
determined by the by-laws (but in no case to be less than 4 per cent) 
is paid on second preferred stock; 5 per cent of the remaining net 
profits are then set aside for the purpose of buying shares of first 
preferred stock at the discretion of the directors; out of one-half of 
the remaining net profits, dividends, not to exceed 20 per cent, are 
paid to holders of industrial partnership stock; the other half of the 
remaining net profits, subject to provision being made for a reserve 
fund, is apportioned to " principal employees," upon the basis of 



PROFIT SHARING IN" THE UNITED STATES. 71 

heir earnings, in shares of industrial partnership stock issued at par. 
ieginning with January 1, 1913, no further issue of industrial part- 

•nership stock can be made unless at least a 5 per cent dividend is paid 
on the outstanding industrial partnership stock. 
Until industrial partnership stock to the amount of $1,000,000 is 
issued the entire voting power of stockholders is vested in the holders 
of the first preferred and industrial partnership stock, each holder of 
the former being entitled to one vote for each share held and each 
holder of the latter being entitled to one vote for each 10 shares held. 

At the next annual meeting after industrial partnership stock to 
the amount of $1,000,000 shall have been issued, the entire voting 
power wiM rest with the holders of that stock, unless: (a) For any 12 
months dividends on first preferred stock average less than 4 per 
cent; (b) if for any 24 months such dividends average less than 6 
per cent per annum; (c) if for any 36 months such dividends average 
less than 7 per cent; or (d) if for any period of four years all cumu- 
lative dividends have not been paid in full. The voting power reverts 
to the preferred stockholders in cases (a) and (b) temporarily, and 
in cases (c) and (d) permanently. 

All shares of industrial partnership stock are nontransferable and 
nonassignable except to the company itself. When a holder of such 
stock, from whatever cause, ceases to be an employee, no dividends 
thereafter accrue from his stock, and he or his legal representative 
must resell his shares to the company at par or, at the company's 
option, exchange them for second preferred stock. 

Employees contracting for industrial partnership stock have no 
right to any accounting by the company concerning its business or 
profits. They are subject to the rules and discipline of the company 
and to discharge like other employees, but with the right of appeal- 
ing in writing to the directors, whose decision is final. 

RESULTS OF THE WORKING OF THE PLAN. 

The percentage of the total employed that participated in the dis- 
tributed profits during the period of existence of the plan, 1912 to 1915, 
varied from 7 (the lowest) in 1912 to 8.4 (the highest) in 1915. 
Over one-half of all the participants in 1914 were associated with the 
selling end of the business in the capacity of directors of sales, dis- 
trict managers of sales, and ordinary salesmen. Slightly over one- 
fourth of the participants held executive and supervisory positions 
in the manufacturing departments of the business. The remainder 
of the participants occupied clerical positions of various kinds. In 
this connection, however, it is interesting to note that although con- 
stituting only 8.4 per cent of the total employed in 1915, the partici- 
pating group received 26.3 per cent of the total pay roll. 



72 



BULLETIN OF THE BUREAU OF LABOK STATISTICS. 



The following table shows the annual salaries of the employees 
participating in the profit sharing during the year 1914: 



. 



Salary. 
$1,200 to $1,500.. 
$1,500 to $1,800.. 
$1,800 to $2,000.. 
$2,000 to $3,000.. 
$3,000 to $5,000.. 
$5,000 to $10,000. 
$10,000 and over. 



Number. 
55 
45 
35 
43 
22 
6 
4 



210 

Thus it may be seen that about two-thirds of the participants 
received less than $2,000 per year, less than one-third from $2,000 to 
$5,000, and only 10, or 4.8 per cent, of all participants received an 
annual salary of over $5,000. 

The amounts distributed as profits constituted the following per- 
centage additions to the ordinary earnings of the participants: In 
1912, 33.3 percent; in 1913, 36.2 percent; in 1914, 25 per cent, and in 
1915, 24.9 per cent. 

The cost of the plan to the company in terms of per cent of the 
total pay roll was: In 1912, 7.6 percent; in 1913, 9.2 per cent; in 1914, 
6.3 per cent, and in 1915, 6.5 per cent. 

The following table shows the number of participating employees 
who have left the employ of the company since the inception of the 
plan and the causes for leaving: 



Table 29. 



-PARTICIPATING EMPLOYEES LEAVING EMPLOY OF COMPANY. BY YEARS' 

AND CAUSES. 



Year. 


Death. 


Dis- 
charge. 


Volun- 
tary 
leaving. 


Other 
causes. 


Total. 


1912 


1 

1 
2 


2 
3 
2 




2 
2 
2 


5 

8 
13 


1913 


2 

7 


1914 





Out of a total of slightly over 200 industrial partners during each 
of the years of the existence of the plan the following numbers left the 
employ of the company for Causes stated below: In 1912, 5; in 1913, 
8; in 1914, 13, making a total of 26 in three years. The following are 
the causes of their withdrawal from employment: Voluntarily, 9; 
discharged, 7; death, 4; other causes, 6. 

As noted elsewhere, the divisible profits are reinvested in the busi- 
ness of the company, the specific annual amounts being capitalized or 
converted into industrial partnership stock to be distributed to par- 
ticipating employees — the industrial partners — on the basis of their 
respective salaries. 



PEOFIT SHAEIXG IX THE UXITED STATES. 



73 



Year. 


Partici- 
pating 
employ- 
ees. 


Shares 
held. 


Par 

value of 

shares 

held. 


1911 

1912 


167 
190 
202 
210 
228 


410 

15,499 

34, 103 

. 46,882 

59, 696 


&4.100 
154; 990 
341, 030 
468, 820 
596, 960 


1913 


1914 


1915 





The following table shows the number of participating employees, 
Le number of shares held by them and the par value of these shares 
for the years 1911 to 1915: 

Table 30.— NUMBER OF PARTICIPATING EMPLOYEES AND NUMBER AND PAR VALUE 
OF SHARES HELD, BY YEARS, 1911 TO 1915. 



The value of the industrial partnership stock held by employees on 
March 1, 1916, was $596, 960. This amount constituted slightly over 
10 per cent of the entire authorized capital stock of the company and 
was held by 228 employees, or 8.4 per cent of the total employed. 

The text of this plan is reprinted herewith in full : 

ARTICLES OF ASSOCIATION. 

1. (a) Said first preferred stock may be issued in payment for the property and 
assets, including good will (including name) of the original company, with the assump- 
tion by this company of the liabilities of the original company, accrued or accruing 
or arising out of the state of affairs existing at the time of such purchase. 

(6) No increase of first preferred stock shall be authorized without the written 
consent of the holders of three-fourths of the then outstanding stock of each of the 
three classes of stock. 

2. (a) Second preferred stock may be issued only: First, in exchange for industrial 
partnership stock, as hereinafter provided; or, second, for cash or property. 

(6) Increases of second preferred stock may be authorized by vote of a majority 
of all stock outstanding of the classes or class of stock then entitled to vote as herein- 
after provided in paragraph 11. 

3. 1 (a) The first issue of industrial partnership stock shall be for cash to such em- 
ployees of the original company as shall be designated by the directors of this new 
company as having substantially fulfilled the requirements as to time and remunera- 
tion of principal employees as hereinafter set forth; and each such employee may 
subscribe, payable in cash, for shares, disregarding fractions, in proportion to salary. 

(6) All subsequent issues of industrial partnership stock shall be to principal em- 
ployees as defined and limited in paragraph 8 of this agreement, but after January 
1, 1913, no such issue shall be made unless a dividend for the preceding calendar 
year of at least 5 per cent in cash on industrial partnership stock already outstanding 
shall be paid or provided for. 

(c) Increases of industrial partnership stock may be authorized by vote of a ma- 
jority of all stock outstanding of the classes or class of stock then entitled to vote as 
hereinafter provided in paragraph 11. 

4. In ascertaining net profits: 

(a) The valuation of good will (including name) of the original company shall not 
be increased beyond the valuation thereof at which it is taken in this company's 



This cash purchase applied only to an initial issue of $4,100. The article is no longer operative. 



74 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 



purchase of the property and assets of said original company; nor shall any sum be 
added for good will (including name) of this company. 

(b) The total amount allowed for depreciation since the organization of this com- 
pany shall not at any time be less than a yearly allowance of 5 per cent, figured on 
dies, tools, furniture and fixtures, buildings, and machinery. 

5. First preferred stock shall be entitled to a preferential cumulative dividend 
at the rate of 8 per cent per annum, payable quarterly as and when declared by the 
directors, and shall begin to accrue as of or on December 1, 1911. 

6. Second preferred stock may, as herein limited, be issued in series under pro- 
visions in the by-laws and amendments thereof: the first series to include all second 
preferred stock issued until, by amendment of the by-laws, the rate of dividend is 
changed; the second series to begin upon such change of rate and to include all second 
preferred stock issued until another such change of rate; and so on, similarly, as to 
subsequent series. But the rate so provided for any series shall always remain the 
rate of dividend for that series. 

The first series of second preferred stock shall be entitled, after dividends on first 
preferred stock have been paid or provided as aforesaid, to a preferential cumulative 
dividend at such rate (not less than 4 per cent per annum) as may be provided in 
the by-laws. 

The second series of second preferred stock shall be entitled to a dividend (similar 
in preference to said first series dividend) at such rate as may be provided in the 
amendment to the by-laws; and so on, similarly, as to subsequent series. But in 
no series shall the rate of dividend provided be less than 4 per cent per annum. 

7. After all first and second preferred dividends have been provided for as above 
required, there shall be set aside annually out of the remaining net profits 5 per cent 
of such remainder for the purpose of buying in shares of first preferred stock as and 
when the directors may deem it expedient. 

Out of one-half of the remaining net profits, dividends may be declared and paid 
annually to holders of industrial partnership stock. The rate shall not exceed a 
total of 20 per cent for any year. 

8. After all above requirements shall have been fulfilled, the remaining net profits 
shall be apportioned under provisions of the by-laws to principal employees as extra 
remuneration for services theretofore rendered by them, except that an amount or 
amounts not at any time exceeding a total of 10 per cent of the total par value of the 
then outstanding capital stock of all classes may be reserved in a suspense account 
at the discretion of the directors, who may likewise dispose of the same, except as 
may be otherwise provided by the by-laws. 

Such extra remuneration shall be paid to each principal employee by issuing to him 
for, such services, out of authorized industrial partnership stock, shares of industrial 
partnership stock of the total par value equal to his apportioned extra remuneration. 

Principal employees shall be limited to the following: 

Employees (including salaried officers) of this company, at the time any such ap- 
portionment is voted, whose aggregate service in this company (including time served 
with the original company) shall amount, at the end of the calendar year for which 
such apportionment is made, to the time set forth below, and whose remuneration 
actually received from one or both of said companies during such calendar year (but 
not counting remuneration paid for overtime work or piecework or commissions) 
shall have been as set forth below, and which rate of remuneration in this company 
shall have been approved by a two-thirds vote of all the directors, namely: 

At least seven years' service and remuneration of at least $1,200, or at least six 
years' service and remuneration of at least $1,500, or at least five years' service and 
remuneration of at least $1,800, and who shall have contracted in writing with this 
company for extra remuneration. 



PROFIT SHARING IN THE UNITED STATES. 75 

9. (a) All shares of industrial partnership stock shall be nontransferable and non- 
assignable, except to or for this company as provided below. 

(6) Whenever an industrial partnership stockholder ceases, from any cause, to be 
an employee, no dividends shall thereafter accrue to his stock, and he or his legal 
representatives shall forthwith transfer and assign such industrial partnership stock 
at and in accordance with the request of this company, upon payment or tender by 
this company of the par value thereof, or at the company's option upon its issue or 
tender (in exchange for such industrial partnership shares) of an equal number of 
second preferred shares. In either case there shall also be paid in cash all declared 
but unpaid dividends. 

(c) No such industrial partnership shares shall be paid for in cash, however, if any 
obligations due to first preferred stock remain unsatisfied or if the company's capital 
shall have or would thereby become impaired. 

10. In case of liquidation or dissolution of the company or a distribution of its 
assets, or in case of any sale of substantially its entire property and assets, first pre- 
ferred stock shall be entitled to a preference to the extent of $125 a share and all 
accrued but unpaid dividends thereon; and thereafter second preferred stock shall 
be entitled to a preference to the extent of $10 a share and all accrued but unpaid 
dividends thereon; and then industrial partnership stock shall be entitled to receive 
$10 a share and all declared but unpaid dividends thereon — after which all surplus 
value remaining shall be divided pro rata among the holders of all classes of stock 
according to their total par value holdings. 

11. Until industrial partnership stock to the amount of $1,000,000 in par value shall 
have been issued, the entire voting power of stockholders, except as otherwise pro- 
vided in subdivision (c) of this paragraph, shall vest in first preferred and industrial 
partnership stock together, each holder of first preferred stock being entitled to one 
vote for each share held and each holder of industrial partnership stock being entitled 
to one vote for each 10 shares held, but without any fractional vote for any shares 
aggregating less than 10 shares. 

At the next annual meeting of the stockholders after industrial partnership stock 
to the amount of $1,000,000 shall have been issued, the entire voting power of stock- 
holders shall vest and remain in holders of industrial partnership stock, except that 
holders of first preferred stock or holders of first and second preferred stock shall have 
voting power as hereinafter provided : 

(a) If for any 12 months dividends On first preferred average less than 4 per cent 
per annum, except in case of destruction of any substantial part of the manufacturing 
plant by fire, earthquake, or other natural calamity, or if for any 24 months such divi- 
dends average less than 6 per cent per annum, then holders of first preferred stock 
shall have sole voting power of stockholders, but without power to alter or amend 
this agreement, except by vote of two-thirds of each class of stock, outstanding; but, 
when full obligations to first preferred shall have been again earned and paid (figuring 
minimum depreciation as above provided in paragraph 4), voting power shall revert 
to holders of industrial partnership stock, and the original plan shall be carried on, 
unless meanwhile sole voting power shall have finally vested in first preferred stock- 
holders as provided in the following paragraph (6). 

(6) If for any 36 months such dividends average less than 7 per cent per annum, or 
if in any period of four years the company shall not have paid all cumulative dividends 
in full, so that there shall be no dividend or part of any dividend in arrears, then 
sole voting power shall vest at the next annual meeting and thereafter remain in 
first preferred stockholders. 

(c) In case of a proposed dissolution of the company or of amendment or alteration 
of this agreement, or of a sale or lease of all or such substantial part of its property as 
would involve a virtual change or abandonment of the company's business, holders 



76 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

of all classes of stock shall be entitled to vote; and such dissolution, amendment or 
alteration, or sale or lease, may be voted and authorized by vote of -a majority of the 
outstanding stock of each class in the case of a dissolution, and of two-thirds of the 
outstanding stock of each class in case of such amendment or alteration or sale or 
lease. 

12. No mortgage or mortgages for more than a total of one-half the par value of all 
classes of stock then outstanding shall be given or placed upon the company's property 
or any part of it without the written consent of the holders of three-fourths of the 
then outstanding first preferred stock. 

BY-LAWS. 

Article II. — Employees — Contract for extra remuneration — Industrial partnership 

stoclc. 

Section 1. Contract for extra remuneration. — The directors, or any officer or officers 
of the company authorized by them for such purpose, may contract in behalf of the 
company in writing with employees for extra remuneration for future sendees, as 
limited by the agreement of association and as hereinafter provided . 

Sec 2. No right of accounting. — It shall be agreed in each contract between the 
company and any such employee that he shall have no right thereunder to any ac- 
counting by the company concerning its business or profits, and that, if notwithstand- 
ing such agreement it is deemed that he has any such right, he waives the same. 

Sec 3. Subject to rules, and discipline and discharge — Appeal. — Employees holding 
such contracts shall at all times be subject to the rules and discipline of the company 
and to discharge like other employees, but with the right of appeal, upon discharge 
or forced resignation, to the directors, whose decision shall be final; such appeal to 
be made in writing and presented within 30 days from the date of such discharge or 
forced resignation; and pending the appeal such employee may be suspended. 

Sec 4. Apportionment of net profits — Fractional adjustment. — Such net profits as 
are to be apportioned as extra remuneration for such services among the principal 
employees shall be apportioned annually in proportion to the amount of remuneration 
actually received during the entire preceding calendar year by such principal em- 
ployees (not including any remuneration for overtime work, piecework, or commis- 
sions), except that in determining such proportions all amounts in excess of f 10 (the 
par value of the shares of industrial partnership stock) or in excess of any multiple 
of $10, up to and including $5, shall be disregarded, and all such excess amounts 
from $5 to and including $9.99 shall be considered $10. In making these fractional 
adjustments, amounts may be supplied from or carried to the suspense account. 
The directors may likewise, at any time after January 1, 1912, apportion similar net 
profits earned from the incorporation of this company to December 31, 1911, inclusive. 1 

Article IX. — Amendment — Alteration — Repeal. 

Amendment, alteration, repeal. — These by-laws may be amended, altered, or re- 
pealed at any meeting of the stockholders, when only one class of stock is entitled 
to vote, by a two-thirds vote of all the outstanding stock of such class; and, when first 
preferred and industrial partnership stock are entitled to vote together, by a vote of 
two-thirds in interest of the total par value of the outstanding shares of said two classes 
of stock, without regard to the presence of such two-thirds of each class: Provided, 
however, That the notice calling any such meeting shall contain notice of the purpose 
to amend, alter, or repeal a by-law or by-laws, specifying or identifying the by-law 
or by-laws to be amended, altered, or repealed. 

1 For issue of industrial partnership stock for services, see Articles of Association, paragraph 8. 






PROFIT SHAKING IX THE UNITED STATES. 77 

As can readily be seen from the articles of incorporation reproduced, 
the entire plan of this firm is based upon specified contractual rela- 
tions. Thus each of the participating employees, or of the industrial 
partners, as they are called in the plan, in order to come under the 
plan, is obliged to sign the following contract: 






CONTRACT WITH EMPLOYEE FOR EXTRA REMUNERATION. 

(Not a contract of employment.) 
— Co. and — : hereinafter called employee, in consideration of $1 by each 



to the other paid, the receipt whereof is hereby acknowledged by each, and also in 
consideration of the following promises and agreements by each to the other made, 
do hereby covenant, agree, and contract as follows: 

(1) That certain provisions of the agreement of association and by-laws of said com- 
pany relating to extra remuneration, printed on the back of this contract, are hereby 
made, and agreed to as part of this contract. 

(2) That, at the date of signing this contract, said employee is within said provisions 
as to time of service and rate of remuneration, which are preliminary requisites to 
becoming a principal employee. 

(3) That so long as said employee remains an employee of the company, and fulfills 
for any calendar year all the said printed provisions requisite to becoming a principal 
employee, he shall be entitled as principal employee to receive, as extra remunera- 
tion for services for each such calendar year h proportional share of net profits for 
each such calendar year, to be paid to h in industrial partnership stock: Pro- 
vided, That at the date when the vote is passed apportioning net profits for any preced- 
ing calendar year he shall still be an employee of the company. 

(4) The company may terminate or modify this contract as may be required by any 
alteration or amendment or repeal of said agreement of association or by-laws. 

PLAN NO. 3. 

In many of its essential features plan No. 3 resembles closely plan 
No. 1 reproduced and described above. Its main point of distinction 
is the fact that the beneficiaries are informed of the basis upon which 
their shares will be computed. 

The application of this plan is limited to "men in the organization 
who have authority to formulate policies, make commitments, engage 
employees, and approve expenditures of money, " with the exception 
of executives who have special bonus agreements with the company, 
as part of their contractual salary. 

For the purpose of distributing the available profits the eligible em- 
ployees are classified into four distinct and separate groups, as per 
section 2 of the plan, each group receiving a specific part of the total 
amount available for distribution during each specific distribution 
year, each group amount being apportioned among its members on a 
per capita basis. 

Provisions slightly different from those shown in the reproduced 
text govern the distribution of the profits assigned to group 4 — 
plant foremen, managers of bureaus, chief clerks of departments, and 



78 



BULLETIN OF THE BUREAU OF LABOR STATISTICS. 



assistant branch managers. The points of distinction are as follows: 
(1) The form of payment of the shares is all cash in group 4, 
as against part cash and part stock in the cases of the first three 
groups, as per section 3 of plan; and (2) employees of group 4, 
in case of leaving employment, forfeit share for current year only, 
while members of the first three groups, aside from forfeiting the 
shares for the current year, forfeit also one-fifth of the share paid to 
them in stock (still held by the company) during the previous year. 

The specific part of the divisible profits assigned to each of the 
groups of participants varies from year to year, changes being made 
at the discretion of the committee in charge of the plan. For 1915 the 
fund was apportioned as follows: Groups 1 and 2 each received 30 
per cent and groups 3 and 4 each received 20 per cent of the fund. 

Of a total of 9,645 employees of the company,. 271, or 2.8 per cent 
participated in the distributed profits of 1914. The number of 
employees in each of the four groups were as follows: 10 in group 1, 
64 in group 2, 197 in group 3, none of the employees appearing in 
group 4. This is accounted for by the fact that prior to 1915 this 
group had not as yet been brought under the plan. The preliminary 
profit-sharing fist for 1915 gives the group distribution as follows: 
Total participating 314, of which 11 are in group 1, 36 in group 2, 
52 in group 3, and 215 in group 4. On this basis the available profit- 
sharing fund for 1915 will be distributed as follows: 

Table 31.— DISTRIBUTION OF PROFITS OF 1915. 



Group No. 


Employees par- 
ticipating. 


Per cent 
of fund 
allotted. 


Number. 


Per cent 
in each 
group. 


1 


11 

36 

52 

215 


3.5 
11.5 
16.6 
68.5 


30 
30 
20 
20 


2 


3 


4 





To 85 v per cent of all the participants will be allotted 40 per cent of 
the profit-sharing fund, while 15 per cent of all — mostly high execu- 
tives — will receive 60 per cent of all the distributed profits. 

The text of this plan, as announced for 1915, is herewith reproduced 
in full: 

On April 6, 1915, the directors voted to continue the employees' profit-sharing plan 
for the year of 1915, making some modifications as to the grouping of participants but 
not changing the total amount of the fund, and by reason of the responsible executive 
position which you occupy and in the belief that your work and efforts can materially 
influence the profits of the business, we take pleasure in advising you that your name 
has been placed on the list of participants for this year. 



PROFIT SHARING IN THE UNITED STATES. 79 

This statement of intention concerning a voluntary and contingent distribution of 
a certain part of our 1915 profits does not in any way constitute a contract on the part 
of the corporation, nor alter or affect any of its contract relations, with you or other 
employees. Unless we receive at once your written declination of this offer we will 
understand that you accept it on this condition. 

The plan is continued for the fiscal year of 1915 only, but it will be renewed from 
year to year unless, in the judgment of the board of directors, it shall prove undesirable, 
or experience suggests amendments or modifications. 

The deductions from the total net profits referred to in the plan will amount to 

approximately $2,640,000 for the year 1915, and therefore the total net profits this 

i year must exceed this amount before anything will be set aside for the fund. For 

example : 

The amount 
applicable to 
your group 

If the net The total will be 

profits of fund will per 

1915 are — be — cent, or — 

$2, 640, 000 Nothing. Nothing. 

3,640,000 ~ $120,000 

4, 640, 000 260, 000 

5, 640, 000 410, 000 

6,640,000 560.000 

7, 640, 000 710, 000 

Etc. Etc. Etc. 

The number of participants in your group as at present constituted is men 

and your share, on a per capita division, will be of the amount earned by your 

group. However, the finance committee reserves the right to increase or decrease 
the number of participants in your group as may be necessary from time to time 
which of course may slightly alter these figures. 

The fund shall be known as the "employees' profit-sharing fund," and it shall be 
administered by the finance committee and under the following terms and conditions: 

1. The fund. — The fund shall be computed in the following manner: From the con- 
solidated net profits of : — and subsidiary companies as certified to by our auditors 

there shall be deducted: (1) The amount of the 7 per cent dividends on the preferred 
stock; (2) the amount which, under its charter, the corporation is required to set 
aside annually in " Special surplus account" for the amortization of the preferred 
stock, and (3) a further amount equal to 5 per cent upon the common stock outstanding. 
There shall thereafter be computed a sum arrived at by taking 12 per cent of the 
balance remaining up to the first $1,000,000 thereof; 14 per cent of such balance in 
excess of $1,000,000 and up to $2,000,000; and 15 per cent of the excess of such balance 
over $2,000,000, which sum shall constitute the fund. 

The credits to the "'Special surplus account" for the amortization of the preferred 
stock will reduce the amount of the preferred dividends, and thus increase the amount 
available for the fund each year. 

The total fund shall be distributed to the participants by dividing the amounts into 
four parts, one part for each group, by use of percentages adopted for each division 
annually by the finance committee. Thereafter the amount of each group fund shall 
be equally divided among the participants thereof as described below. 

2. Participants. — Employees entitled to participate shall be only those holding 
executive positions as described below, whose responsibilities include spending the 
corporation's money, handling its property, making commitments for its account, 
and the employment and supervision of its employees. 

Participants shall be divided into four groups, according to positions held, and 
according to whether, and to what extent, the finance committee may deem a partici- 
pant is contributing to the corporation's profits by reason of his position, worth, and 
loyalty, as follows: 






80 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

Group No. 1 : The principal operating heads at and . 

Group No. 2: Managers of principal departments, junior officers, managers large 
branches, and general plant superintendents, at and . 

Group No. 3: Assistant managers of principal departments, managers minor 
branches, assistant plant superintendents, and general foremen, at and . 

Group No. 4: Plant foremen, managers of bureaus, chief clerks of departments and 
assistant branch managers. 

At the beginning of each year, the official heads of the executive, manufacturing, 
sales, financial, and accounting departments shall submit a list of proposed participants 
to the finance committee, from which the committee shall make selections, approve 
those entitled to participate in the fund, and notify each person accordingly. 

No director of the corporation, nor any officer or employee holding a personal bonus 
contract, shall participate in the fund, unless such participation is approved by the 
executive committee. 

3. Distribution of fund. — Within 30 days after the annual audit of the corporation's 
books shall have been completed, each participant will be notified of the amount of 
bonus, if any, to which he is entitled under the plan and will receive a check for not 

less than per cent of the amount and subject to possible forfeiture mentioned 

below, a participating certificate for the balance covering common stock of the cor- 
poration, which stock will be delivered to him 25 per cent after the first year, 25 per 
cent after the second year, and 50 per cent after the third year, provided he has 
continued uninterruptedly in the service of the corporation. Any dividends received 
upon said stock while in the possession of the corporation will be promptly paid to 
participants. 

Participants shall have no right to assign stock held for their account by the cor- 
poration, and any attempt at assignment will give the corporation the right to remove 
the person making it from the list of participants. 

The finance committee shall have discretion after August 1 of each year, if the net 
profits warrant it and the market price of the common stock seems favorable, to buy 
common stock from time to time for the account of the fund, in order to give employees 
the benefit of purchases at as low prices as possible. 

4. Promotions. — In the event of promotion no change shall be made during the 
current year in the group to which a participant is already assigned. 

5. Resignations. — Participants who resign from the service during the year shall 
not be entitled to participate, proportionately or otherwise, in the fund of the current 
year, and shall forfeit to the corporation as a penalty 20 per cent of the common stock 
held for their account from the bonus of the previous year. 

6. Dismissals. — Participants dismissed from the service during the year, for lack of 
efficiency or because their services are no longer required, shall not be entitled to 
participate, proportionately or otherwise, in the fund of the current year, but shall 
receive the full amount of common stock, if any, held for their account from previous 
years. 

Participants released on account of curtailment in business or shutdowns, and not 
on account of lack of efficiency or conduct prejudicial to the corporation's business, 
or being officers and failing of reelection, shall be entitled to their proportionate 
participation in the fund of the current year, and shall receive the full amount of 
common stock, if any, held for their account from previous years. 

7. Disability and death. — Participants compelled to leave the service on account of 
protracted illness, disability, or old age, shall be entitled to their proportionate par- 
ticipation in the fund of the current year, and shall receive the full amount of common 
stock, if any, held for theii' account from previous years. 

In case of the death of a participant having stock held for his account as above, 
the corporation shall promptly deliver it to his legal representative, and as soon there- 
after as determined shall deliver to his legal representative his proportion of the cash 
and stock from the fund of the current year. 






PROFIT SHARING IN THE UNITED STATES. 81 

PLAN NO. 4. 

This limited profit-sharing plan, in operation since 1912, was 
framed, according to statements of the management, with two ob- 
jects in view — (1) additional reward to and recognition of deserving 
employees, and (2) greater and better results for the company in the 
way of greater efficiency, reduced costs, and improvement in the 
quality of the finished product. 

Profit sharing under this plan depends, first, on the company's 
net income for the year, the rate of participation being governed by 
the amount of such income in excess of stipulated requirements; 
second, on the standing of the particular manufacturing or sales unit 
with which a specific employee is connected; and, third, upon the 
length and character of the service of the individual employee. 

Individual shares of profits depend upon the net income of the 
company above a certain specified minimum. When the net profits 
of the business exceed the stipulated minimum, for the first $100,000 
of such excess a profit-sharing dividend of 8 per cent on salaries or 
wages is declared; for the second $100,000 in excess of the minimum 
8.1 per cent is paid; and for each additional $100,000 above the 
minimum profits two-tenths of 1 per cent is added. At a certain 
point further the relative increase is changed from two-tenths of 1 
per cent to three-tenths of 1 per cent. Shares or profits are paid 
wholly in cash, but under certain conditions the cash received by an 
employee as his profits may be used to purchase shares of common 
■stock of the company at par. For instance, each employee whose 
dividend totals $200 or more is privileged to subscribe for whole 
shares of the company's common stock at par ($100) up to the 
amount of even hundreds of his cash distribution. Such subscriptions 
are entirely optional with the employee. 

The plan is administered by a committee consisting of the officers 
of the company and the head of each department involved. 

The standing of the particular manuf acturing or sales unit for pur- 
poses of profit sharing is established by a very elaborate method of 
accounting which takes into consideration controllable costs and 
quality of finished product in the case of manufacturing units, and 
increased sales, controllable sales expenses, etc., in the case of sales 
units. It is to be noted that the basis of factory participation is quality 
and cost of the finished product. In order to equitably determine 
the eligibility of the various factories it was found necessary to adopt 
"a few arbitraries, " as detailed below. 

Owing to the fact that the factories are located in different zones — 
paying different prices for their manufacturing material — it was 
deemed fair that all factories be charged with the same price for 
their raw materials; also that the charge for depreciation be elimi- 
nated from factory expenses. This is done in order to put all the 
56831°— Bull. 208—17 6 



82 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

plants on the same basis, thus holding the superintendents and their 
assistants responsible only for expenses directly under their control. 

By reason of the factories manufacturing different sizes and 
brands, and in order to level them down to a common basis, a system 
is in force whereby the average cost of the total output of each factory 
is ascertained; an arbitrary figure per unit is then credited to the 
factory having the lowest cost and the other factories making the same 
size or brand are credited with the difference between their cost 
and the lowest cost plus the arbitrary figure. All factories coming 
within a fair range of best practice are eligible to profit sharing. 

To cover finished product not up to the standard quality, ranging 
from one-tenth to one-half of 1 per cent of their year's output, the 
factories are penalized from a minimum of 2 per cent to a maximum 
of 10 per cent. Any factory exceeding one-half of 1 per cent becomes 
ineligible for profit sharing that year. 

The positions participating in the profit sharing of factories are as 
follows : 

Superintendent, assistant superintendent, head bookkeepers, in- 
spectors, foremen, operators, chief engineers, chief firemen, and 
chemists. 

City Branches. 

In determining the eligibility of the city salec branches, an effi- 
ciency score is kept on the following lines : 

Sales. — For each 1 per cent of increase, credit is given up to a 
maximum of 20 points; minimum, 2 points. 

Cash collections. — For each one-fourth of 1 per cent over standard, 
credit is given up to a maximum of 20 points; minimum, 10 points. 

Container collections. — For each 1 per cent over standard a maxi- 
mum of 10 points; minimum, 5 points. 

Total operating cost, per point. — For each one-tenth of 1 per cent 
decrease per point, credit is given up to a maximum of 26 points; 
minimum, 2 points. 

General condition of branch property. — Maximum of 8 points, mini- 
mum of 3 points. 

Condition of salesmen's books. — Maximum of 8, and minimum of 3 
points. 

Condition and appearance of equipment. — Maximum of 8, and 
minimum of 3 points. 

This allows a possible score of 100 points. A score of 70 or more' 
points entitles to profit sharing. 

Rents and depreciation are eliminated in establishing cost of 
delivery. 

The participating positions are as follows: 

Superintendents, assistant superintendents, inspectors, cashiers, 
and head bookkeepers. 



PROFIT SHARING IN THE UNITED STATES. 83 

Genera! office and field men. 

To this group of participants belong employees holding the more 
important positions in the general office and some men in the field 
not connected with any particular plant. All employees in the gen- 
eral office receiving $2,000 or more per annum are eligible, unless in 
some specific case a department head recommends otherwise. The 
admission of employees receiving this salary, without regard to posi- 
tion, is considered fully warranted, as under this company's method 
of advancement, it is said, it means proven efficiency as well as a 
satisfactory service. When the force is augmented by outside men 
at a salary of or exceeding $2,000 (which is not frequent) , it is invariably 
because of a technical knowledge or a special fitness which would 
entitle them to profit-sharing consideration aside from salary. 

Salesmen. 

The eligibility of salesmen is dependent on a certain percentage 
of increase in the sales of the company's leading brand over the sales 
of the previous year. 

Results of the working of the plan. 

A total of $171,824 was distributed as profits during the first two 
years of the operation of the plan, the dividends on the earnings of 
the participants amounting to 8.3 per cent in 1913, and 8.1 in 1914. 
No profits were available for distribution for the business year end- 
ing June 30, 1915. The relative proportions of the total employed 
that participated were as follows: In 1913, 837 or 9.6 per cent; in 
1914, 860 or 9.2 per cent. The cost of the plan to the management, 
in terms of a percentage of the total labor pay roll was 1.3 per cent 
and 1.2 per cent in 1913 and 1914, respectively. 

PLAN NO. 5. 

The application of the following plan, No. 5, is restricted to em- 
ployees earning "not less than $780" per year. The first distribu- 
tion under it will be made on February 1, 1917. 

The following is tjie text of this plan as announced to the officers 
and employees of the company on December 31, 1915: 

1. The company will distribute among the officers and employees entitled to share in 
the benefits of the plan so much of its common stock as shall have been acquired by it 
for the purpose by an expenditure of money equal in amount to 20 per cent of its net 
profits for the year 1916 remaining after making certain deductions, as hereinafter de- 
fined and explained. Net profits remaining after such deductions shall mean the net 
profits remaining after deducting from the consolidated net profits of the company for 
the year 1916 as determined by its auditors, whose determination shall be final — first, 
the full amount of dividends on the preferred stock of the company for the year 1916 
and then an amount equal to 5 per cent on its common stock outstanding at the end of 
the year. 






84 BULLETIN OF THE BUKEAU OF LABOR STATISTICS. 

2. Only officers and employees, other than pieceworkers, who shall have been in the 
employ of this company or one of its said subsidiary companies for approximately the 
entire calendar year 1916 and shall remain in such employ until February 1, 1917, and 
whose salary for the year 1916 shall have been not less than approximately $780, shall 
be entitled to share in the benefits of the plan. No officer or employee shall, however, 
be entitled to share in the benefits of this plan who shall have sold or otherwise dis- 
posed of any stock received by him under the profit-sharing plan of 1915, or who shall 
have sold or otherwise disposed of or attempted to sell or otherwise dispose of any 
stock in anticipation of the receipt of such stock by him under this plan for the year 
1916, unless the committee mentioned in paragraph 4 of this plan shall consent in 
writing to any such sale or other disposition. 

3. Subject to the right of such committee to exclude any officer or employee for any 
cause which it deems proper, the stock to be distributed under this plan for the year 
1916 shall be distributed among the officers and employees mentioned in the preceding 
paragraph 2 as nearly as may be pro rata upon the following salary basis: The full 
salary received for the year 1916 by each officer and employee entitled to share in the 
benefits of the plan, who shall have been so employed approximately from January 1, 
1915, to February 1, 1917, and one-half of the salary received for the year 1916 by each 
officer and employee entitled to share in the benefits of the* plan so employed for a less 
period, but not less than from approximately January 1, 1916, to February 1, 1917, 
shall be taken as the basis for distribution. 

4. The determination of what officers and employees shall be entitled to share in the 
benefits of the plan, the amount of their salaries to be taken for the purposes of the 
plan, all matters to be determined under the plan, including adjustments as to frac- 
tional shares, and all details of the plan and its operation shall rest with a committee 

of the board of directors of this company, consisting at present of Messrs. , , 

and , whose determination shall be final. 

5. Nothing in the plan contained shall be deemed to limit the power of this company 
or of its said subsidiary companies to discharge any officer or employee at any time, 
with or without cause, and any officer or employee so discharged shall not be entitled 
to share in the benefits of the plan. This company reserves the right to dispose in 
whole or in part of its interest in any subsidiary company at any time, in which event 
the officers and employees of such subsidiary company shall not be entitled to partici- 
pate in the benefits of the plan, except to such extent, if any, as the committee of 
directors above mentioned may deem proper. 

6v The provisions of paragraph 2 of this plan that no officer or employee who shall 
sell or otherwise dispose of his stock shall be entitled to share in the benefits of the plan 
unless the committee shall consent to such sale or other disposition, were inserted in 
furtherance of the fundamental idea of the plan that the officers and employees of this 
company and its subsidiaries would be included among its permanent stockholders 
and as part owners of its business and properties be directly and vitally concerned in 
its continued prosperity and success. To the extent therefore, that officers and em- 
ployees sell or otherwise dispose of their stock, the real purpose of the plan is defeated. 
The retention of their stock by officers and employees from year to year will result in 
constantly increasing benefits and advantages to such officers and employees and to 
the company alike, and in this way the fundamental purposes of the plan can be ac- 
complished. The committee will be glad, however, to consider and pass upon the ap- 
plication of any officer or employee of this company, if unusual circumstances at any 
time exist. 

7. This plan is applicable only to the calendar year 1916. It is the intention of the 
company, however, to continue such plan from year to year, unless in the judgment 
of its board of directors it shall prove unsatisfactory or experience suggests amendments 
or modifications. 



PEOFIT SHARING IK THE UNITED STATES. 85 

BONUS PLANS COMMONLY KNOWN AS PROFIT SHARING. 

The term "profit sharing" has been extended in popular usage to 
include several bonus plans, the essential features of which are clearly 
outside of a correct interpretation of the term. These schemes, 
although providing a supplementary remuneration to the ordinary 
earnings of employees, do not involve a direct or definite relation to 
the net profits of the enterprise. 

In examining the profit-sharing system of an establishment little 
concern is generally given to the theoretical conceptions of the em- 
ployer who formulated it. Interest lies rather in the fact that the 
: employer is willing to share a part of his profits with his employees. 
This interest is heightened in some cases by the fact that the amount 
thus distributed is considerable, presenting a marked augmentation 
to the ordinary earnings of the employees. 

In many instances, profit sharing (as popularly understood) takes 
the form of a simple bonus in terms of a percentage on earnings which 
is given to employees at the end of the business or calendar year, the 
percentage varying with the length of service. In most of these in- 
stances the bonus is a mere gift which is not guaranteed and bears no 
direct relation to the profits realized, even if the amounts distributed 
vary more or less with the general prosperity of the business. In one 
notable instance, one of the most widely known, the profits likely 
to accrue within the year are estimated, about one-half of this esti- 
mated amount being distributed among the employees of the concern. 
The distribution under this plan takes the 'form of a guaranteed 
minimum wage per day, graded according to skill. 

Profit sharing, properly speaking, should clearly be distinguished 
from those related forms of remuneration in addition to ordinary 
wages which do not depend directly or vary with the net profits of 
the enterprise. Whatever merit the plans presented in the follow- 
ing section may have, they can not be classified as involving the ap- 
plication of the principle of profit sharing. Inasmuch, however, as 
many of such plans are commonly thought of and discussed as profit 
sharing, it was deemed desirable to give complete accounts of the 
workings of the more notable types of such plans in operation in the 
United States at the present time. 

The main interest of the plans described in this section lies in the 
factors which determine the bonuses to be distributed and the condi- 
tions which determine participation. In plan No. 1, presented below, 
the amounts to be distributed depend upon the length of service and 
a subscription for a specified amount of stock of the company. In 
plan No. 2 the distributions depend wholly upon the skill of the em- 
ployees, as indicated by the rate of wages received and upon a mini- 
mum length of service. In plan No. 3 the conditions under which the 



86 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

various bonuses are paid are the nature of the work and the merit of 
service. In the various stock subscription plans, types of which are 
shown on pages 136 to 157, the extra remuneration depends upon 
subscriptions for stock, while in the various so-called cash bonus 
plans based upon the length of service, the extra remuneration depends 
upon both the earnings of an employee and his length of service; the 
plan on pages 158 and 159 is presented as typical of the latter 
group. In the plan described on page 161 the hourly rates of wages 
paid vary with the gross receipts, while in the plan given on 
page 162 the daily wage varies with the price for which the manu- 
factured commodity is sold. Finally, under the plan described 
on pages 164 to 166 the bonus dividend on the earnings of the em- 
ployees depends upon the savings collectively effected in a specific 
department over and above an established standard. 

PLAN NO. 1. 

HISTORY OF THE PLAN. 

This plan, which was established in 1887 and revised last in 
January, 1913, is applicable only to employees who earn $1,500 or 
less per year, excluding salesmen and traveling representatives. It 
provides that«an employee in order to be eligible to participate in the 
benefits of the plan must either own or subscribe for an amount of 
common stock of the company equal to one year's salary, neither 
more nor less. 

Upon application and after approval by the company, the required 
amount of stock is issued at its market value and held for the em- 
ployee by three trustees selected by the board of directors of the 
company from its officers, directors, or employees. A cash payment 
of 2 J per cent of the cost price of the stock is required at the time 
of subscription, and a yearly cash payment of at least 4 per cent of 
the total amount ,of subscription must be made until the stock is 
paid for in fuU. Three per cent interest is charged on the unpaid 
balances in the meantime. 

Immediately upon payment of the first installment of the purchase 
price, each employee receives a " trust receipt pass book," containing 
the formal contract between himself and the company, called a 
" trust receipt." This trust receipt entitles the holder to a dividend 
at the rate of 16 per cent upon the amount of his wages for the year, in 
addition to the regular dividend on the common stock that he holds. 
Both these dividends are applied toward the payment of the stock, 
but trust receipt dividends are credited to the employee only if he 
has been in the employ of the company continuously during the 
preceding half year, dividends being paid on January 1 and July 1 
of each year. 



PROFIT SHARING IN THE UNITED STATES. 87 

After the stock has been paid for in full, the employee's " trust receipt 
>ass book" is exchanged for a " paid-up trust receipt" and all further 
stock dividends, as well as " trust receipt dividends/' are paid in cash. 
If the employee chooses, however, to withdraw from the plan before 
he has been a participant for two years, all trust receipt dividends 
which have been credited to him are deducted from the amount due 
him. 

After an employee has been a participant in the benefits of the plan 
or an owner of common stock for five years, he may increase his 
common-stock holdings to 125 per cent of his annual earnings and 
receive trust receipt participation dividends at the rate of 20 per 
cent. After 10 years he may increase his holdings to 150 per cent 
of his annual wages and receive trust receipt dividends at the rate 
of 24 per cent, the maximum. 

Employees are prohibited by the company from assigning or trans- 
ferring trust receipts or any interests represented thereby. 

An employee may, by giving notice at any time, withdraw from the 
scheme and surrender his holdings; if he decides to withdraw before 
being a participant at least two years, or before his credits from all 
sources equal 35 per cent of his subscription, he forfeits all dividends. 
If he withdraws from the scheme after having been a participant for 
two years or more and the amounts credited to his account from all 
sources equal 35 per cent of his total subscription, he may, at the 
option of the company, and under certain provisions, be paid dividends 
on his stock, and also receive trust receipt dividends. In this case, 
he is debarred from further participation in the benefits of the plan. 

After having been a participant for two years or more and having 
paid his stock subscription in full, an employee giving notice of 
withdrawal has the option of receiving either stock certificates or the 
cash, equal in amount to his credit from all sources. As in the case 
of the other employee he forfeits the right to again participate in 
the benefits of the scheme. 

The rules governing the operation of this plan since January 1, 1913, 
will be found in the following text of the revised plan, issued in pam- 
phlet form by the company: 

RULES GOVERNING OPERATION OF PLAN. 

PLAN FOR TRUST RECEIPT DIVIDENDS FOR EMPLOYEES THROUGH 

STOCK OWNERSHIP. 

APPLICATION. 

Any employee of the Co. (hereinafter called "the company"), earning an 

amount not exceeding $1,500 a year, excluding, however, salesmen and traveling repre- 
sentatives, may upon application to the treasurer of the company and after approval 
by the company, have purchased' for his account, at its market value at the time of 
application, an amount of common stock of the company equal to his annual wages, 
but neither more nor less, except as hereinafter provided. 






88 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

TRUSTEES. 

The stock so purchased for an employee shall be held for the benefit of the employee 
by three trustees to be appointed from time to time by the board of directors of trie 
company, which trustees may be selected at the board's discretion from its officers, 
directors, or employees. 

PAYMENTS, CREDITS, AND INTEREST. 

Such employee shall pay in cash toward the purchase of stock at the time of the 
approval of his application for its purchase not less than 2| per cent of the cost price 
thereof. He shall also pay in cash during each year succeeding the day of purchase, 
until the stock is fully paid for, not less than 4 per cent of the total amount of his sub- 
scription. 

All dividends declared upon the stock so purchased for an employee and all trust 
receipt dividends due such employee, as hereinafter provided, shall be credited 
upon his unpaid balance until said stock and all interest payable are fully paid. 

Upon the unpaid balance which remains after crediting cash payments, dividends 
on stock, and trust receipt dividends, the company shall charge the employee interest 
at the rate of 3 per cent per annum; when, however, the stock subscribed together 
with all interest due have been fully paid, trust receipt dividends and dividends 
upon the paid-up shares of stock shall be paid in cash to the employee subject to the 
conditions hereinafter provided. 

TRUST RECEIPT PASS BOOKS, PAID-UP TRUST RECEIPTS, AND TRUST RECEIPT DIVIDENDS. 

Immediately upon the first payment on the part of the employee on account of the 
purchase price of the stock, the trustees shall issue to the employee making such 
payment a trust receipt pass book, containing the formal contract, called the trust 
receipt, between the company and the employee and stating the amount of stock 
bought and the amount of money paid on account of such stock, and guaranteeing to 
the holder of the trust receipt, dividends upon it, at the rate of 16 per cent per annum 
upon the amount of wages actually earned by him during each year or part thereof, 
subject to the following conditions: 

(a) Trust receipt dividends shall be payable semiannually January 1 and July 1, 
and shall be credited on those dates on the employee's unpaid balance as hereinbe- 
fore provided. 

(6) Said trust receipt dividends shall be credited to the employee only in case he 
is in the employ of the company on the dates said dividends become payable, and 
shall have been in the employ of the company continuously during the semiannual 
period just preceding or from the date of his trust receipt pass book, if same was issued 
during the previous semiannual period. 

(c) Should the employee leave the employ of the company or make application for 
withdrawal from this plan during the said semiannual period, he shall not be entitled 
to receive or be credited with any trust receipt dividend whatsoever on the wages 
earned by him during any portion of such period. 

(d) When the purchase price of the stock subscribed by any employee, together 
with all interest payable, are fully paid as hereinbefore provided, then the trustees 
shall recall the trust receipt pass book and shall issue to the employee instead thereof 
a paid-up trust receipt, and all further trust receipt dividends, as well as dividends 
on the stock held for him under this plan, shall be paid to the employee in cash, 
subject to all conditions herein stated, and subject in particular to the further con- 
dition that if the employee should make application for withdrawal from this plan 
before he has been a participant under same for two years, all trust receipt dividends 
that have been paid to him in cash shall be deducted and retained by the company 
from the cash returnable to him. 



PROFIT SHARING IN THE UNITED STATES. 89 

Neither trust receipt pass book nor paid-up trust receipt, nor any interest therein 
nor any stock represented thereby, can be assigned or transferred by the employee, 
and the company will not recognize any such assignment or transfer from the name 
of the original holder. 

The trust receipt pass book or paid-up trust receipt shall be surrendered to the 
company whenever its holder has demanded and received a certificate or certificates 
of the common stock of the company therefor, or has been paid or tendered the value 
of his interest in such stock; or after termination of his employment, upon payment 
or tender to him of the value of his interest in any such trust receipt pass book or 
paid-up trust receipt on the date of the termination of his employment, according 
to the provisions of this plan. 

The trustees, from time to time, as dividends or payments are credited or interest 
charged for the account of the employee, shall have proper entries made in his trust 
receipt pass book. 

INCREASE OF HOLDINGS AFTER FIVE YEARS. 

After an employee has been a shareholder of the common stock of the company for 
a term of five years, he may, upon written application to the treasurer of the company, 
increase his holding of stock under this plan by an amount equal to 25 per cent of 
his annual wages at the time he makes application for such increase, and thereafter 
while he remains an employee receive a trust receipt dividend at the rate of 20 per 
cent per annum upon his wages, subject, however, to conditions (a), (6), (c), and (d) 
hereinbefore stated . The additional stock so purchased for his account shall be held 
by the trustees subject to all provisions and conditions herein contained. 

INCREASE OF HOLDINGS AFTER 10 YEARS. 

After an employee has been a shareholder of the common stock of the company for 
a term of 10 years, he may, upon written application to the treasurer of the company, 
increase his holding of stock under this plan to an amount equal to 150 per cent of 
his annual wages at the time he makes application for such increase, and thereafter 
while he remains an employee, receive a trust receipt dividend at the rate of 24 per 
cent per annum upon his wages, subject, however, to conditions (a), (6). (c), and (d) 
hereinbefore stated. The additional stock so purchased for his account shall be held 
by the trustees subject to all provisions and conditions herein contained. 

An employee holding a paid-up trust receipt who increases his subscription under 
any of the provisions of this plan shall have issued to him a trust receipt pass book 
for such increase. When the amount of this additional subscription, together with 
all interest thereon, is paid in full, a new paid-up trust receipt covering both amounts 
will be issued to him in exchange. 

INCREASE OF HOLDINGS UPON ADVANCE IN WAGES. 

An employee receiving an increase in his annual wages — such wages, with increase, 
however, not exceeding $1,500 per annum — may, upon approved application to the 
treasurer of the company, have purchased for his account, subject to all the condi- 
tions of this plan, an additional amount of the common stock of the company at its 
then market value equal to the increase in his annual wages. Until such application 
is actually made to the treasurer of the company and approved the basis upon which 
trust receipt dividends are payable to the employee shall remain unchanged. 

Any employee under this plan whose wages are increased to a sum in excess of $1,500 
per annum, and whose trust stock has not been paid for in full, may retain his stock 
under this plan, provided he shall continue to pay annually on account thereof an 
amount equal to the 4 per cent per annum payment required under this plan, plus a 
further amount equal to the annual dividends previously credited to his account until 
same is paid for in full. 



90 BULLETIN OF THE BTJBEATJ OP LABOB STATISTICS. 

Any employee whose wages are increased beyond $1,500 per annum, who has paid 
for his stock in full, shall receive at once certificates of stock covering the full shares 
and cash for any fraction thereof to which he may be entitled, on surrender of his 
paid-up trust receipt. Refund for any fractional interest shall be based upon the 
then market value of the stock. 

WITHDRAWAL. 

An employee may at any time surrender his trust receipt pass book or his paid-up 
trust receipt and withdraw his interest thereunder, subject to the terms and condi- 
tions stated below : 

Notice and surrender. — He shall give notice in writing to the treasurer of the com- 
pany of his desire to receive such money or stock as may be due him, and shall, with 
said written notice, surrender his trust receipt pass book or paid-up trust receipt. 

Withdrawal before participation for two years. — An employee who has been a holder 
under this plan of either a trust receipt pass book or a paid-up trust receipt for a period 
of less than two years prior to the date of his written notice of withdrawal shall have 
refunded to him only such an amount as he actually has paid in cash. 

Withdrawal before payment in full. — In the event of an employee giving written notice 
of his desire to withdraw from this plan before the amount of his cash payments, divi- 
dends on stock and trust receipt dividends less interest payable, equal 35 per cent of 
the total amount of his subscription, there shall be refunded to him only such money 
as he has actually paid in cash toward the purchase of his stock. He shall not derive 
the benefit of any dividends of any kind whatsoever which may have been credited. 

In the event of an employee who has been a holder of a trust receipt pass book for 
a period of two years or more giving written notice of his desire to withdraw from 
this plan, after the amount of his cash payments, dividends on stock and trust receipt 
dividends less interest payable, equal or exceed 35 per cent of the total amount of his 
subscription, he shall receive within 90 days thereafter, at the company's option, an 
amount equal to the money paid by him toward the subscription price of his stock, plus 
the dividends on his stock and trust receipt dividends credited, less interest payable, 
subject to all conditions and provisions herein stated: Provided, That this privilege 
shall not be given to anyone who, to bring the total amount of his net credits to 35 per 
cent, has paid more than 5 per cent of his total subscription within 60 days next pre- 
ceding his notice of withdrawal. The employee so withdrawing, upon receiving the 
value of his interest in this plan, either in the common stock of the company or its 
money equivalent as provided, shall surrender all rights hereunder and shall be 
debarred from further right to subscribe for stock or to have or enjoy any of the privi- 
leges of this plan. He shall not be entitled to receive any trust receipt dividends upon 
wages earned after date of written notice of his desire to withdraw, nor shall anyone 
receive any such trust receipt dividends who is not the rightful holder of a trust 
receipt pass book or paid up trust receipt. 

Withdrawal after payment in full. — If an employee who has been a holder of a trust 
receipt for two years or more, and who has paid his subscription in full with interest, 
should desire to withdraw the paid up stock held in trust for him under this plan, or 
its money equivalent, he may do so by giving 90 days' notice in writing to the company 
of his intention so to do. 

At the end of 90 days, or before at the option of the company, there shall be deliv- 
ered to him certificate or certificates of the common stock of the company representing 
stock paid for under this agreement, or its money equivalent, based upon the market 
price of the- stock on date of written notice of withdrawal, and subject to all condi- 
tions and provisions herein stated: Provided, however, That the total cash payments 
made by the employee during the 60 days immediately preceding the date of his 
written notice of withdrawal be not in excess of 10 per cent of the total amount of his 



PROFIT SHARING IN THE UNITED STATES. 91 

subscription, in the manner stated in the preceding clause entitled " Withdrawal 
before payment in full. " No certificate shall be demanded or issued for a fractional 
share of stock. 

An employee receiving such stock or its money equivalent as provided shall sur- 
render all rights and privileges under this plan, as stated at the close of the preceding- 
clause entitled "Withdrawal before payment in full. " 

Withdrawal or discharge of employee. — The fact that an employee is taking advantage 
of and is receiving the benefits of this plan, shall not deprive the company of the 
right at any time to discharge such employee and thereby terminate his participation 
under the plan. Should the employee be discharged or should he leave the employ 
of the company for any cause, he shall within three days thereafter, make written 
application for the withdrawal of his interest under this plan. In the event of his 
failure to do so then his participation in the benefits of the plan shall cease and deter- 
mine upon the termination of his employment, and settlement shall be based on the 
status of his account on said date of termination, subject to the conditions and pro- 
visions herein stated. 

SETTLEMENT UPON DEATH OP EMPLOYEE. 

In the event of the death of an employee participating in this plan, there shall be 
paid to his estate all money paid by him on account of his subscription to stock 
under the plan, together with all dividends credited upon the purchase price of said 
stock less the amount of interest, if any, remaining unpaid. In addition, his estate 
shall receive in cash the benefit of any increase in the market value of his investment 
over and above its purchase price. 

This arrangement shall be effective regardless of the amount paid toward the origi- 
nal subscription. 

GUARANTY. 

If, on the date of the signed application of an employee for withdrawal of his interest 
under this plan, the market value of the total stock held for him is less than the total 
of his subscription in money, there shall be refunded to him, without deduction, all 
money paid and dividends credited, less interest payable, subject however to all 
conditions governing withdrawal before or after payment in full. 

Any increased value of the employee's stock on the date of his application for 
withdrawal shall accrue to him only in the event that his subscription shall have been 
paid in full, and subject in particular to the conditions governing withdrawal after 
payment in full. 

All stock held by an employee under this plan shall be considered as a whole, and 
fractional additions made from time to time, as the result of salary increases or for 
other reasons, shall not be considered in making refunders as [sic] separate sub- 
scriptions. 

STOCK INCREASES. 

If at any time common capital stock is issued to stockholders for cash, then a holder 
of stock under the trust receipt plan will have added to his account a pro rata portion 
of such increase less such an amount which, sold at the current market, will produce a 
sum sufficient to pay for his pro rata allotment, and the remaining amount of stock 
shall be added without cost to the account of- the trust receipt holder. 

Any increase in the common capital stock distributed to common stockholders as 
a dividend shall be added to the account of a trust receipt holder in his proper pro- 
portion, without charge or deduction in amount, and such stock dividend may not 
be sold or otherwise disposed of, but must be added to the account of the employee 
until such account is terminated in accordance with other sections of this plan. 



92 



BULLETIN OF THE BUREAU OF LABOR STATISTICS. 



PASS BOOKS AND TRUST RECEIPTS— PROPERTY OF THE COMPANY. 

Trust receipt pass books and paid up trust receipts shall belong to the company 
and shall be surrendered to it whenever a holder, after paying for the interest repre- 
sented by such receipt or pass book, has demanded or received a certificate or certifi- 
cates of the common stock of the company therefor or has been paid or tendered the 
value of such interest; or after termination of the employment of the receipt holder, 
upon payment or tender to him of the value of his interest in such receipt according 
to the provisions of this plan. 

TERMINATION OF PLAN. 

The company reserves the right as against any or all employees to terminate this 
plan altogether at the end of any fiscal year, and in such event settlement with each 
trust receipt holder will be made according to the condition of his individual account 
at such time and under the aforementioned conditions governing withdrawal. 

RESULTS OF THE WORKING OF THE PLAN. 

The following table shows in detail, by distribution periods, since 
1903, the number and per cent of employees participating, dividends 
to employees, and the cost of the profit-sharing plan to the company 
in terms of a percentage of the total pay roll of the establishment. 

Table 32.— NUMBER- OF EMPLOYEES, PROPORTION PARTICIPATING, PARTICIPA- 
TION DIVIDENDS TO EMPLOYEES, AND COST OF PROFIT-SHARING PLAN TO 
EMPLOYER, BY DISTRIBUTION PERIODS, 1903 TO 1915. 



Dividend period end- 
ing- 



Total 

em- 
ployees 



Employees 

participating 

in profits. 



Num- 
ber. 



Per 

cent 

of 

total. 



Total pay 
roll. 



Pay roll of par- 
ticipants. 



Amount. 



Per 
cent 

of 
total 
pay 
roll. 



Dividends to employees. 



Amount. 



Per 


cent 


of 


total 


pay 


roll. 


6.9 


7.1 


7.1 


7.0 


7.1 


6.9 


7.0 


5.4 


5.3 


4.2 


4.4 


4.3 


4.6 


3.5 


4.0 


4.1 


4.2 


4.3 


4.3 


6.2 


7.2 


7.6 


8.4 


10.1 


11.0 



Per 
cent 
ofpay 
roll 
of 

par- 
tici- 
pants. 



Dec. 31 
June 30 
Dec. 31 
June 30 
Dec. 31 
June 30 
Dec. 31 
June 30 
Dec. 31 
June 30 
Dec. 31 
June 30 
Dec. 31 
June 30 
Dec. 31 
June 30 
Dec. 31 
June 30 
Dec. 31 
June 30 
Dec. 31 
June 30 
Dec. 31 
June 30 
Dec. 31 



, 1903. 
, 1904. 
, 1904. 
, 1905. 
, 1905. 
, 1906. 
,1906. 
, 1907. 
, 1907. 
, 1908. 
, 190S. 
, 1909. 
, 1909. 
, 1910. 
, 1910. 
, 1911. 
,1911. 
, 1912. 
, 1912. 
, 1913. 
, 1913. 
, 1914. 
, 1914. 
, 1915. 
, 1915. 



940 
952 
987 
1,043 
1,098 
1,157 
1,175 
1,540 
1,544 
1,980 
1,986 
2,040 
2,082 
2,601 
2,640 
2,687 
2,711 
2,840 
2,852 
2,963 
2,980 
2,994 
2,915 
2,912 
2,898 



458 

476 

474 

499 

529 

531 

527 

535 

525 

551 

537 

599 

584 

647 

726 

778 

795 

859 

950 

1,122 

1,272 

1,474 

1,653 

2,003 

1,991 



48.7 
50.0 
48.0 
47.8 
48.2 
45.9 
4,4.9 
34.7 
34.0 
27.8 
27.1 
29.4 
28.0 
24.9 
27.5 
29.0 
29.3 
30.2 
33.3 
37.9 
42.7 
49.2 
56.7 
68.8 
68.7 



$243,060 
238, 904 
250, 698 
270, 140 
273, 039 
289, 050 
292, 797 
380, 582 
385, 997 
479, 999 
485,406 
515, 855 
523, 684 
722, 284 
734,984 
752, 871 
763, 566 
824,728 
832, 880 
926, 136 
937, 877 
992, 328 
1, 003, 280 
984, 241 
997, 756 



$134,762 
141,551 
149, 307 
155, 279 
161,668 
166, 693 
170,034 
171,043 
171,901 
166,511 
168, 759 
174 , 108 
188,325 
199,483 
228, 557 
236, 632 
251,073 
280, 595 
283, 405 
340, 807 
395, 112 
443, 581 
495, 899 
590, 133 
648,444 



57. 6 
59.3 
59.6 
57.5 
59.2 
57.7 
58.1 
44.9 
49.7 
34.7 
34.8 
33.8 
36.0 
27.6 
31.1 
31.4 
32.9 
34.0 
34.0 
36.8 
42.1 
44.7 
49.4 
60.0 
64.9 



$16,178 
16, 993 
17, 924 
18,841 
19,408 
20,004 
20, 405 
20,526 
20,629 
20, 252 
21,200 
22, 310 
23, 955 
25, 384 
29,319 
30, 619 
32, 030 
35, 522 
36, 140 
57, 660 
67, 805 
75, 557 
84, 176 
99, 549 

109, 671 



12.0 
12.0 
12.0 
12.1 
12.0 
12.0 
12.0 
12.0 
12.0 
12.2 
12.6 
12.8 
12.7 
12.7 
12.8 
12.9 
12.8 
12.7 
12.8 
16.9 
17.2 
17.0 
17.0 
16.9 
16.9 



Since 1903 the proportion of the total employed that participated 
in the benefits of the plan varied considerably — from 24.9 per cent 






PEOFIT SHARING IN THE UNITED STATES. 



93 



for the distribution period ending June 30, 1910, to 68.8 per cent for 
the period ending June 30, 1915. The average proportion partici- 
pating for the entire period was slightly over 40 per cent of the total 
employed. 

The size of the participation dividend, as might he expected, did 
not vary as much as the proportion of employees participating. The 
lowest average dividend paid to an employee — 12 per cent — was dur- 
ing the first years of the 1 operation of the plan, while the highest 
average dividend — 16.9 per cent — was paid at the end of the period 
ending June 30, 1915. 

Below is presented a table showing the occupation groups of the 
participating employees for one representative distribution period, 
ending December 31, 1915: 

Table 33.— NUMBER AND PER CENT OF PARTICIPATING EMPLOYEES IN EACH OCCU- 
PATION GROUP, FOR THE DISTRIBUTION PERIOD ENDING DEC. 31,1915. 



Occupation group. 


Employees. 


Number. 


Per cent. 


Executive and supervisory 


38 
506 

1,447 


1.9 
25.4 
72.7 


Clerical 


Manufacturing 


Total 


1,991 


100.0 





The provisions of the plan, as described in detail above, exclude 
from the benefits of the plan employees whose earnings exceed $1,500 
per year; this accounts for the small number of executive and super- 
visory employees that participated in the distribution of December 31, 
1915, namely, 1.9 per cent. All of the latter were foremen. As the 
table shows, over 70 per cent of all the participants belonged to the 
group of mechanical or manual occupations, skilled and unskilled. 

The following table shows the changes in the total number em- 
ployed and the number participating, 1904 to 1915: 

Table 34.— NUMBER AND PER CENT OF EMPLOYEES PARTICIPATING IN PROFITS, 

BY YEARS, 1904 TO 1935. 



Year. 


Total em- 
ployees. 


Employees participat- 
ing in profits. 


Number. 


Per cent. 


1904 


970 
1,071 
1,166 
1,512 
1,983 
2,061 
2,621 
2,699 
2,646 
2,972 
2, 955 
2, 905 


475 

514 

529 

530 

544 

592" 

687 

787 

905 

1,197 

1,564 

1,997 

. 


49.0 
48.0 
45.4 
34.4 
27.4 
28.7 
26.2 
29.2 
34.2 
40.3 
52. 9 
68.7 


1905 


1906 


1907 


1908 


1909 


1910 


1911 


1912 


1913 


1914 


1915 





94 BULLETIN OF THE BUKEAU OF LABOR STATISTICS. 

On December 31, 1915, 1,997, or 68.7 per cent of all the employees 
of the company, with the aid of the plan, were holding 3.2 per cent 
of the total number of shares of common stock of the corporation, 
and 2.8 per cent of the number of shares of common and preferred 
stock of the concern combined. The 4,378 shares of common stock 
held by them on the above-mentioned date had a market value of 
over three million dollars. The aggregate amount of money paid in 
by them to cover their subscriptions since 1903 was $543,616. No 
modifications in the essential features of the plan as outlined above 
are contemplated in the near future. 



PLAN NO. 2. 






The relation of the amount of money distributed as "profits" 
under this plan to the actual profits of the company is discretionary. 
It is stated by the company to be as follows: 

The amount of the profits to be distributed among the employees 
will be determined yearly and will be based upon the result of the 
company's business during the previous year, together with an esti- 
mate of what the profits will be during the year to come. The amount 
of profits to be distributed, once determined, will not be changed, 
however, during the year. 

The plan went into operation January 12, 1914, and since that 
date the participation rates as described *below have undergone no 
change. Inasmuch as it can hardly be assumed that the profits of 
the company have undergone no variation during this period, it can 
not be said that there is an immediate relation between the net 
profits of the business and the amounts distributed to employees 
under this plan. For this reason, whatever of intrinsic value the 
plan may have, it may not properly be classified as profit sharing, 
for, as pointed out in this report, one of the essential principles of 
profit sharing is that the amount distributed to participating em- 
ployees shall depend upon and vary with the net profits of the 
enterprise. 

Under this plan the so-called share of profits that each employee 
receives although paid at the same time as his wages is yet separate 
and distinct. The detailed provisions governing the plan seem to 
indicate that the design is to give to the employee who is getting the 
least wages the largest share of the "profits." This can readily be 
seen from the text on page 99 showing rates of wages, participation 
rates, and total daily income of specific classes of employees. 



THE BASIC WAGE OR SALARY. 



Before the introduction of the plan in 1914 an effort was made 
by the management to determine and establish what would be an 
equitable basic wage for specific grades of work, the elemental basis 
for such classification being the relative amounts of skill required in 






PROFIT SHARING IN THE UNITED STATES. 



95 



specific grades of work. Accordingly, such a classification was worked 
out from a general survey of the entire operating force. 

As a standard of comparison for the individual skill of each operative 
the established shop rate of the plant was taken. This shop rate 
for any particular operation was derived from the machine produc- 
tion, as rated by the records of the specific shop, less a percentage 
deduction for the human element and the necessary stoppages of 
the machine. For each operation in the shop the human equation 
has been based on what was considered "the best possible production 
of a skilled employee determined by actual trial." It was decided 
that all shop employees should be classified as to occupation into 
five general divisions: (A) mechanics and subforemen; (B) skilled 
operators; (C) operators; (D) helpers; (E) laborers; and (F) a special 
class composed of women, messengers, etc. The five major classes 
just mentioned were each further divided into: (1) First-class work- 
men; (2) men of average ability; and (3) beginners. Thus an em- 
ployee rated as A-l would be a first-class mechanic, while a man 
rated as D-3 would be a helper and a beginner. 

Rates of pay on a per hour basis were then determined and adopted 
according to the following table: 

Table 35.— CLASSIFICATION OF EMPLOYEES AND WAGE SCHEDULE MADE EFFEC- 
TIVE OCT. 1, 1913 (COMPILED AUG. 1, 1913.) 

[Key: A — Mechanics and subforemen. B— Skilled operators. C— Operators. D — Helpers. E — Laborers. 
Service — Employees in service continuously for 2 years and over. 1 — First-class workmen. 2 — Men oi 
average ability. 3— Begiuners.] 





For- 
mer 
hir- 
ing 
rate. 


Pres- 
ent 
per 
hour 
rate. 


Number of employees having a wage-rate range of— 




Skill rate. 


59-60 
cents. 


52-58 
cents. 


46-50 
cents. 


42-45 
cents. 


38-41 
cents. 


34-37 

cents. 


29-33 
cents. 


26-28 
cents. 


23-25 
cents. 


20-22 
cents. 


Total. 


Condensed to— 




65 
cents. 


60 

cents. 


54 
cents. 


48 
cents. 


43 

cents. 


38 
cents. 


34 
cents. 


30 
cents. 


26 
cents. 


23 
cents. 




A-XX .. 






2 


7 


















9 


A-X 
























A-l 




54 
48 
43 
43 
38 
34 
30 
38 
34 
30 
26 
34 
30 
26 
126 
23 






2 
















2 


A-2. 








45 














45 


A-3... 










273 
51 












273 


B-Service 






















51 


B-l.... 












606 










606 


B-2... 














1,457 








1,457 


B-3... 


23 














1,317 






1,317 


C-Service 












19 








19 


C-l 














348 








348 


C-2 
















2,071 






2,071 


C-3.. 


23 
















4,3ii 




4,311 


D-l 














31 




31 


D-2 
















137 






137 


D-3 


23 
23 

20 
















416 
2,003 


208 


416 


E 


















2,003 


Special 


















208 


























13, 304 



1 This minimum-wage classification has been revised upward three times since Oct. 1, 1913, the mini- 
mum for this and all other classes except specials since Oct. 10, 1916, being 43 cents. 






96 



BULLETIN OF THE BUREAU OF LABOR STATISTICS. 



PARTICIPATION IN THE "PROFITS. 



For purposes of participation all the employees of the company 
are divided into two general groups: (A) Salaried employees — hired 
and paid by the month, and including all the general executive, super- 
visory, technical, commercial, and clerical employees; and (B) wage- 
earning employees — hired by the day or hour, and engaged directly or 
indirectly in the various processes of manufacturing, who may be 
termed manufacturing employees. It is for the latter group chiefly 
that the plan, under certain conditions, has established a minimum 
of $5 for adult employees for an eight-hour day. 

A. Salaried Employees. 

Class 1 . — Embraces the greater part of the executive and .super- 
visory employees of the company, from foremen up, with an earning 
capacity of over $175 per month. The bonuses are paid annually, 
individual amounts being determined arbitrarily by the management. 

This class, it appears, was receiving these bonuses before 1914. 

For purposes of bonus distribution at the end of the last fiscal year, 
this class was divided into three separate divisions. The following 
shows the number of employees in each of the divisions and the total 
amount received by them : 



Division. 


Number 
of em- 
ployees. 


Total 
bonuses. 


1 

2 

3 


79 

240 

1,050 


$213, 700 
367, 300 
246, 300 


Total 


1,369 


827,300 



Of the total number in this group — 1,369 — 994 were also benefited 
by the general plan instituted on January 12, 1914. 

Class 2. — Salaried employees. Rates of participation are according 
to classified basic salary, as follows: 

Classified basic • Rate per day 

salaries. under plan. 

$75 and under $5. 00 

$76 to $85. 5. 25 

to $95 5.50 

to $110 '. 5. 75 

$111 to $120. '....;■ 6. 00 

$121 to $135 .-...' ." 6. 25 

$136 to $150 .- 6. 50 

$151 to $165 : 6. 75 

$166 to $175 7. 00 



PROFIT SHARING IN THE UNITED STATES. 



97 



Class 3. — Salaried employees. Rates of participation are according 
to classified basic salary, as follows: 

Classified basic Rate per day 

salaries. under plan. 

$30 and under $2. 00 

$31 to $35. 2. 25 

$36 to $40 2. 50 

to $45 2.75 

to $50 3. 00 

$51 to $55 3. 25 

$56 to $60 3. 50 

$61 to $65 3. 75 

$66 to $75 4. 00 

B. Manufacturing Employees. 

Rates of participation are according to classified basic wage rates. 





Basic 

wage 

rate per 

hour. 


Partici- 
pation 

rate per 
hour. 


Total income per 
hour. 


Total income per 8-hour day. 


Skilled grade. 


Before 

plan 

became 

effective. 


Under 
plan. 


Before 

plan 

became 

effective. 


Under ' F e r cent 
, 1 increase 

plan - per day. 


A 


Cents. 
80 
73 
68 
61 
54 
54 
48 
43 
38 
48 
43 
38 
34 
43 
38 
34 
34 
34 


Cents. 

n 
m 

13* 

17i 

21 

21 

231 
25f 
27| 
231 
25J 
27| 
28*, 
25f 
27& 
28J 
28i 
2S£ 


Cents. 
80 
73 
68 
61 
54 
54 
48 
43 
38 
48 
43 
38 
34 
43 
38 
34 
34 
34 


Cents. 
87i 
84| 
81* 
78| 
75 
75 
711 
68f 
655 
71| 
68f 
65| 
62i 
68f 
65| 
62* 
62| 
62§ 


S6.40 
5.84 
5.44 
4.88 
4.32 
4.32 
3.84 
344 
3.04 
3.84 
3.44 
3.04 
2.72 
3 44 
3.04 
2.72 
2.72 
2. 72 


87.00 
6.75 
6.50 
6.25 
6.00 
6.00 
5.75 
5.50 
5.25 
5.75 
5.50 
5 25 
5.00 
5.50 
5.25 
5.00 
5.00 
5.00 


9 4 


X 


15 6 


1 


19 5 


2 


*>8 1 


3 


38.9 


B-Service 


38 9 


1 


49 7 


2 j 


59 9 


3 


72 7 


C-Service 


49.7 


1 


59.9 


2 


72.7 


3.i 


83.8 


D-l 


59.9 


2 


72.7 


3 


83.8 


E 


83.8 


Girls 


83.8 







As can readily be seen, the essential principle guiding the distri- 
bution of " profits" is that the largest proportion be given to the 
lowest paid employees; thus an employee with an earning capacity 
of 80 cents per hour receives as " profits" only 9.4 per cent of his 
wage, while the lowest paid operatives receive almost nine times as 
large a proportion, namely, 83.8 per cent. 

DETERMINATION OF ELIGIBILITY FOR PARTICIPATION. 

Below is presented a summary of the rules governing eligibility for 
participation in the benefits of the plan as in force October, 1916. 

Every employee 21 years of age or over, in employ for six months, 
who leads a clean, sober, and industrious life, and who can prove that 
he has thrifty habits, is eligible to share in the profits. 
56831°— Bull. 208—17 7 



98 BULLETIN OF THE BUKEATJ OF LABOB STATISTICS. 

Every married man, no matter what age, in employ for six months, 
who can qualify as to sobriety, industry, and cleanliness, can par- 
ticipate, if he is living with his family. * 

Every employee under 21 years of age, in employ for six months, 
who is the sole support of a widowed mother, or next of kin, and who 
pleads a clean, sober, and industrious life, can participate. 

Immediately after employing a man an investigation is started by 
one of the company's agents especially appointed for that purpose 
into the economic, social, moral, etc., conditions of the prospective 
participant on the theory that while an employee's wages are his 
own, the company having no concern about them, except to pay 
when due, the giving of profits is at the option of the company and is 
conditional upon requirements of thrift. The comprehensiveness 
of this investigation may readily be seen by examining the following 
three exhibits taken from the original records of the education depart- 
ment of the company. 

Record A. — This employee upon investigation made on January 2, 
1914, was not approved for participation because "he lived in a dirty 
insanitary hut, and has a home full of boarders, who sleep three and 
four in a room * * * there is no privacy. Wife looks haggard 
from overwork. She and the children are as dirty as the surround- 
ings." The investigator of the company advised this man "to move 
to a more sanitary neighborhood; clean up, and put in some home 
comforts." 

On May 23 of the same year this employee was again visited. It 
was found that, acting on the suggestion of the company's investi- 
gator, he had greatly improved his home conditions, and had also 
purchased a lot in the suburbs for home building purposes. He was 
accordingly approved for participation. 

On December 16, 1914, upon a third visit, it was found that he 
had completed the payments on the purchased lot, had built a house 
on it, and that he "now has a modern 7-room house, containing a 
bath and all modern improvements, occupied by the family only. 
* * * He also bought new furniture." 

On August 15, 1915, upon a fourth visit the agent of the company 
reported that this employee " is making wonderful progress with his 
share of the profits. His- home is comfortably furnished, the family 
is neat and clean. * * * They are a happy and contented fam- 
ily." 

The record of investigation as kept by the company on a special 
card-index form, follows verbatim: 

1 Since October, 1916, every married man is approved for participation at the end of his first six months 
of service, regardless of home conditions. However, he is expected to meet the expectations of the 
company in matters relating to living conditions, thrift, etc. 



PROFIT SHARING IN THE UNITED STATES. 



99 



Record of Investigation. No. 



Name: 



Address: 



-, 1-9-14; 



Date (factory): 1-10-14. 

3t inv. : 

Age: 30. Date of birth: 



, 5-23-15. 

Date (home): 1-9-14. Date hired: 



[Record A]. 



10-1-13. Date of 



5-10-1883. Religion: Catholic. Speak English: No. 



In U. S.: 1 year. Naturalized: 



Nationality: German Pole. 

Married: Yes. In Detroit how long: 6 months. 

No. 

Dependents. 

Name: . Relation: Wife. Age: 29 years. Address: Same. Extent: Totally. 

Name: . Relation: Daughter. Age: 5 years. Address: Same. Extent: Totally. 

Name: . Relation: Daughter. Age: 3 years. Address: Same. Extent: Totally. 

Name: . Relation: Son. Age: 1}4, years. Address: Same. Extent: Totally. 

Name: . Relation: Son. Age: 4 months. Address: Same. Extent: Totally. 

Habits: Drinks and smokes. Education: Past — One year in old country; present — ■ 
None. Doctor: None; address 

Life Ins. Co. name: None. What kind: Amount: Premiums per 

year: 

Kind of building: 2 -story frame; poor condition. No. of rooms: 7; no bath. Occu- 
pants: Male, 10; female, 1; children, 4. Light: Poor. Air: Poor. Sanitation: Very 
bad. How furnished: Only bare necessities. 

Neighborhood: Very bad. This is an alley with one and two story houses in poor con- 
dition on one side only — Foreign. Rents, month: §14. 

Financial Condition. 



Property owned or buying. 


Location. 


Value. 


Am't 

paid this 

inv. 


Am't 

paid 

(date), 

5-23-14. 


Am't 

paid 

(date), 

12-16-14. 


Am't 

paid 

(date), 

8-10-15. 


None 














Buying lot 


Jerome Park 


$700 

225 

3,250 




$250 
225 






Owns shack 


On lot above 








Buying home 


— Jerome Park 




$900 


$1,100 











Name of bank. 


Location. 


Account 
No. 


Balance 
this inv. 


Balance 
(date), 
5-23-14. 


Balance 

(date), 

12-16-14. 


Balance 
(date), 
8-10-15. 


State Savings 


Main Street 


398 


$300 


$25 


$1 


$116 







Debts to — 


For— 


Balance 

due this 

inv. 


Balance 

due 
(date), 
5-23-14. 


Balance 

due 

(date), 

12-16-14. 


Balance 

due 
(date), 
8-10-15. 


None 












Restrict Lumber Co 


Built shack 




$75 












$150 


$45 













Acc't of share 
of proiits. 


This 
date. 


Acc't of share 
of profits. 


(Date), 
5-23-14. 


Acc't of share of 
profits. 


(Date), 
12-16-14. 


Acc't of share 
of profits. 


(Date), 
8-10-15. 


None 




On lot (v) 

On shack (v).. 

Clothes for 

family (v). 
Moving (v) 

Bank decrease. 


$250 

150 

50 

5 


Paid on home (v). 
Lumber debt (v).. 
Furniture (v) 

Bank decrease 
From sale of shack . 


$650 
75 
20 


Prin. on home 

(v). 
Int. on home 

(v). 
Furniture (v). 

Banked (v)... 


$200 






65 
101 




745 

24 

200 


115 




455 
275 


481 




521 






180 





100 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

Home Condition. 
Date: 5-23-14, Good. Date: 12-16-14, Good. Date: 8-10-15, Good. 

Remarks. 






This man lives in a dirty insanitary hut, and has home full of boarders, who sleep 
3 and 4 in a room. There is no privacy. Some of the boarders go through the room 
where man and wife sleep to reach their own. Wife looks haggard from overwork. 
She and children are as dirty as the surroundings. Have advised him to get rid of 
the boarders; move to a more sanitary neighborhood; clean up, and put in some home 
comforts. Can not approve him for share of the profits under present living conditions. 

May 23, 1914: This man has followed my suggestion made on last investigation. 
He has purchased a lot in the suburbs and has built a 3-room shack on it; occupied by 
his family only. The present home conditions are a great improvement on last 
investigation. This is only a temporary house, but he is going to build a larger home 
as soon as he gets his lot paid for. He has also enrolled in the Ford English school, 
and attends three times a week. The furniture is not excellent, but it is enough for 
their immediate needs. The family, as well as the home, show cleanliness. 

Dec. 16, 1914: Since last investigation this man has completed payments on his 
lot; had a house built on it, and turned over the deed as ]st payment. He now has 
a modern 7-room house, containing bath and all other modern improvements, occupied 
by the family only, which now consist of 7 members. He has a new son one month 
old. He is getting along well with his studies, and can now talk fairly good Eng- 
lish. He expects to graduate with the next class. Has also bought new furniture. 
His home is now comfortably furnished, and very clean. The shack mentioned on 
previous investigation was sold for $200. 

Aug. 15, 1915: Our employee is making wonderful progress with his share of profits. 
His home is comfortably furnished; the family is neat and clean. He can now speak 
English, and has taken out 1st naturalization papers. They are a happy and con- 
tented family. 

Inf'nfrom: Self and wife: Relation: Int'r: . Inv'r: . This 

date: Disapprove. 

Inf'nfrom: Self and wife. Relation: Int'r: . Inv'r: . Date: 

Approve, 5-23-14. 

Inf'n from: Wife. Relation: Int'r: . Inv'r: . Date: Ap- 
prove, 12-16-14. 

Inf'nfrom: Wife and self. Relation: Int'r: . Inv'r: . Date: 

Approve, 8-10-15. 

Approved for Share in Div. Profits. 

By L. G. M. Date: 5-25-14. By A. E. Date: 12-18-14. By L. G. M. Date: 
8-13-15. 

Rate: 1-12-14,- Skill: 34 C 3. Rate: 5-25-14, 62%. Skill: 34 C 3. 

Rate: 12-18-14, 62%. Skill: 34 C 3. Rate: 8-13-15, 62%. Skill: 34 C 3. 

Remarks. 

Have explained profit sharing fully. Think he understands now and will improve 
living conditions generally. 

Record B. — As a result of a first investigation made on December 
1, 1914, this employee was approved for participation because the 
investigator of the company thought "that he will make good use 
of the profits." 






PROFIT SHARING IN THE UNITED STATES. 



101 



Upon a second visit made six months afterwards it was found 
"that the profits have been a detriment to this young man. After 
getting a share of the profits he started in having a good time. He 
not only spent all the profits he received, but the money he had in 
the bank." On the basis of this report the employee was disquali- 
fied from further participation in the benefits of the plan. 

Upon a third visit, again six months later, the investigator of the 
company reported that the employee "has realized his mistake, that 
he now has a bank account and has shown thrift." The employee 
was accordingly put back on the participating roll. 

The record as kept by the company is as follows: 



No. 
Record- op Investigation. 



[Record B]. 



Name: 



Address: 



1-10-14. 



Date (factory): 1-12-1914. Date (home): 1-10-14- Date hired: 6-2-11. Date cf 

last inv. : 

Age: 23 (v). Date of birth: July 7, 1890 (birth certificate). Religion: Catholic. 
Speak English: Yes. Nationality: American. 

Married: No. In Detroit how long: Life. In U. S.: Life. Naturalized: 

Dependents. 

Name: None. Relation: Age: Address: Extent: 

Name: Relation: Age: Address: Extent: 

Name: Relation: Age: Address: Extent: 

Name: Relation: Age: Address: Extent: 



Habits: Good; smokes — does not drink. Education: Past — high school; present — 
None. Doctor: None; address: 

Life Ins. Co. name: Metropolitan. What kind: 20 year endow. Amount: $2,000. 
Premiums per year: $65. 

Kind of building: 2-story brick. No. of rooms: 9 and bath. Occupants: Male 4,' 
female 2; children 1 . Light, air, sanitation: Good. How furnished: Well. 

Neighborhood: Good; American residential 2-story houses in good condition. Boards, 
week: $7. 

Financial Condition. 



Property owned or buying. 


• 
Location. 


Value. 


Am't 

paid 

this inv. 


Am't 

paid 

(date), 

7-10-14. 


Am't 

paid 

(date), 

12-1-14. 


Am't 

paid 

(date), 

8-1-15. 


None 














None 








None. 






Buying lot 


— Center St 


$650 




None. 


$55 












Name of bank. 


Location. 


Account 
No. 


Balance 
this inv. 


Balance 
(date), 
7-10-14. 


Balance 
(date), 
12-1-14. 


Balance 
(date), 
8-1-15. 


H. P. State 

None 


i H. P 


2243 


$64 










None. 






H. P. State 


H. P 


19467 




$24 


$253 











102 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

Financial Condition — Concluded. 



Debts to— 


For. 


Balance 

due 
this inv. 


Balance 

due 
(date), 
7-10-14. 


Balance 

due 
(date), 
12-1-14. 


Balance 

due 
(date), 
8-1-15. 


None 






None. 


None. 


None. 











Acc't of share 
of profits. 


This 
date. 


Acc't of share 
of profits. 


(Date) 
7-10-14. 


Acc't of share of 
profits. 


(Date) 
12-1-14. 


Acc't of share 
of profits. 


(Date) 
8-1-15. 






Bank decrease. 

Can not ac- 
count for any 
of profits. 


$64 


Clothes (v) 

Dentist (v) 


$35 

24 

8 


Insurance (v). 
Lot (v) 

Banked (v) . . . 


$65 

55 

229 




67 


349 



Home condition. 
Date: 7-10-14, Same. Date: 12-1-14, Same. Date: 8-1-15, Same. 

Remarks. 

This man lives with a respectable family, and has started a savings account, and I 
believe will make good use of the profits, if granted. 

July 10, 1914: The profits have been a detriment to this young man. After getting 
a share of the profits he started in having a good time. He not only spent all of the 
profits he received, but the money he had in the bank as well. He has absolutely 
nothing to show for the wages and share of the profits he has received since last inves- 
tigation. 

Dec. 1, 1914: This man has realized his mistake. He has started a new account at 
the H. P. State bank; says he now stays in nearly every evening. Since he has 
shown thrift with his wages since last investigation, I think he should be given 
another chance. 

Aug. 1, 1915: A big change has taken place in this young man. Every one around 
the place where he lives speaks very well of him. He has saved his share of profits, 
bought a lot, and intends to get married shortly and build a home. He has started a 
technical course in the Y. M. C. A. 

Inf'nfrom: Self & Mrs. J. W. Relation: Landlady. Int'r: None. Inv'r. . 

This date: Approve. 

Inf'nfrom: Self & Mrs. J.W. Relation: Landlady. Int'r: None. Inv'r: . 

Date: Disapprove, 7-10. 

Inf'nfrom: Self & Mrs. J.W. Relation: Landlady, ^nt'r: None. Inv'r: . 

Date: Approve, 12-1-14- 

Inf'n from: Self. Relation: . Int'r: None. Inv'r: . Date: Ap- 
prove, 8-1-15. 



Approved for Share in Div. Profits. 



-By A. E. Date: 12-5-14. 



ByL.G.M. Bate: 1-14-14. By . Date: — 

By L. G. M. Date: 8-5-15. 

Rate: 1-1 4-14, 68%. Skill: 43 B 2. Rate: 7-12-14, ■ Skill: 43 B 2. Rate: 

12-5-14, 68%. Skill: 43 B 2, Rate: 8-5-15, 68%. Skill: 43 B 2. 

Remarks. 

Have talked to this man, and he realizes the mistake he has made. Promises to 
mend his ways. 



PROFIT SHARING IN THE UNITED STATES. 



103 



Record C. — This employee, although not eligible to participate by 
reason of the fact that he was under 22 years of age, was put on the 
participating roll upon the recommendation of the company's inves- 
tigator because it was found that he was the sole support of the 
family. The father of the family, upon his death, had left it penni- 
less, without any means of support. 

The record follows: 

No. [Record C]. 

Record op Investigation. 



Name: 



Address: 



-, 1-8-1914, 



-, 8-5-14, 



-, 1-20-15. 



Date (factory): 1-9-14. Date (home): 1-8-14. Date hired: 12-10-13. Date of 
last inv.: 

Age: 20. Date of birth: 3-12-1893. Religion: Protestant. Speak English: Yes. 
Nationality: American. 

Married: No. In Detroit how long: 8 years. In U.S.: Life. Naturalized: 

Dependents. 

Name: . Relation: Mother. Age:46yrs. Address: Same. Extent: Totally. 

Name: . Relation: Brother. Age: 12. Address: Same. Extent: Totally. 

Name: . Relation: Sister. Age: 9. Address: Same. Extent: Totally. 

Habits: Good; does not smoke or drink. Education: Past — Common school. Pres- 
ent — Doctor, ; address: . 

•Life Ins. Co. name: None. What kind: ... Amount: Premiums per 

year: 

Kind of building: '1 -story frame. No. of rooms: Four. Occupants: Male, 1; female, 
1; children, 2. Light: Fair. Air: Good. Sanitation: Good. How furnished : Fairly 
well. 

Neighborhood: Mostly frame cottages in fair condition, congested, mixed nationali- 
ties. Rent, month: §12. 

Financial Condition. 



Property owned or 
buying. 


Location. 


Value. 


Am't 

paid 

this inv. 

1-8-14. 


Am't 

paid 

(date), 

.8-5-14. 


Am't 

paid 

(date), 

1-20-15. 


Am't 

paid 

(date), 

10-5-15. 


None 














Buying home 


2872 Main St 


$2, 850 




None. 


$500 


$765 











Name of bank. 


Location. 


Account 
No. 


Balance 

this inv. 

1-8-14. 


Balance 
(date), 
8-5-14. 


Balance 

(date), 

1-20-15. 


Balance 

(date), 

10-5-15. 


None 








i 
1 




H. P. State 


H. P 


11934 




$250 $5(1 


$105 















Debts to- 


For— 


Balance 
due this 

inv. 
1-8-14. 


Balance 

due 
(date), 
8-5-14. 


Balance 

due 

(date), 

1-20-15. 


Balance 

due 
(date), 
10-5-15. 


Family Furniture Co 


Furniture 


$20 
60 


None. 

$20 

32 






D. J. Green 


Undertaker 

New furniture .... 


None. 
$12 




Family Furniture Co 


None. 











104 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

Financial Condition — Concluded. 



Acc't of share 
of profits. 


This 
date. 


Acc't of share 
of profits. 


(Date) 
8-5-14. 


Acc't of share of 
profits. 


(Date) 
1-20-15. 


Acc't of share 
of profits. 


(Date) 
10-5-15. 






Banked (v) 

Fur niture debt . 
Funeral debt... 
New furniture.. 


$250 
20 
40 
40 


Paid on home 

Undertaker 

Furniture 

Insurance 

Bank decrease. 


$500 
20 
20 
30 


Prin. on home. 
Int. on home.. 

Banked 

Furniture 


$265 
40 
55 
12 




350 


570 
200 


372 




370 





Home condition. 
Date: 8-5-14, Good. Date: 1-20-15, Good. Date: 10-5-15, Same. 

Remarks. 

This boy lost his father by death about 6 months ago, and the mother has had a 
rather hard struggle to make both ends meet. The father did not carry life insurance, 
and they are still in debt for the funeral expenses. This son is very good to his mother. 
He turns his pay envelope over to her each pay day. A very worthy case. Mother 
has no other means of support. 

Aug. 5, 1914: This family has moved to a nice rive-room flat, occupied by them- 
selves only. Have bought new furniture, and everything is clean and comfortable. 
They intend to buy a home of their own as soon as they have a little more saved. 

Jan. 20, 1915: Since last investigation this family has purchased a nice little cottage 
containing G rooms and bath; have all modern conveniences, including furnace, and 
is in a neighborhood not very thickly settled; children have plenty of room to play 
and lots of fresh air.- Boy has taken out a 20-year insurance policy with the New 
York Life for $1,000. 

Oct. 5, 1915: This family is getting along very nicely. They are very thrifty. 
The share of profits has been put to good use, and they are very happy and contented. 
The boy is now 22 years old and has verified his age by birth certificate. Brother 
and sister are attending school. He still lets his mother handle the money. 

Inf 'n from: Self & mother. Relation: Int'r: None. Inv'r: . This 

date: Approve. 

Inf'n from: Self & mother. Relation: Int'r: None. Inv'r: . Date: 

Approve, 8-5-14. 

Inf'n from: Self & mother. Relation: Int'r: None. Inv'r: . 

Date: Approve, 1-20-15. - 

Inf'n from: Employee. Relation: Int'r: None. Inv'r: — . Date: 

Approve, 10-20-15. 

Approved for Share in Div. Profits. 

By A. E. Date: 1-12-H. By L. G. M. Date: 8-7-14. By L. G. M. Date: 
1-23-14. By A. E. Date: 10-23-15. 

Rate: 1-12-14,62^. Skil\34C2. Rate; 8-7-14, 62%. Ski\\34C2. Rate: 1-23- 
15,65%. Skill 38 C 3. Rate: 10-23-15, 65%. Skill 38 C 3. 

Each of the company's investigators devotes his entire time to 
this work. He is furnished with an interpreter and an automobile. 
It is his duty to learn all he can about the employees whom he is 



PROFIT SHARING IN THE UNITED STATES. 105 

requested to investigate. He finds out, as can be seen from the blanks 
here reproduced, what are the conditions in their homes, what recrea- 
tions they indulge in, how much money they have saved, how much 
they owe, how much they send to their friends abroad, how many per- 
sons are dependent upon them, in fact, everything possible that might 
assist in determining whether the employee is to participate in the 
benefits of the plan. The following is a copy of an instruction sheet 
for the guidance of investigators employed by the company: 

To Investigators. — The salient facts to ascertain about the three classes into 
which we have divided our men are noted below. Understand that the lack of positive 
information withholds all benefits from employees until all of the facts in each indi- 
vidual case have been ascertained. 

Married Men. — We must have such information as will assure us through you 
that a man is married and is living with his wife. Use all the thought and ingenuity 
at your command to get this information positively. We also must know about the 
man's habits. 

Single Men Over 22. — Granting the division of the profits to them is based 
entirely upon their being "proven" thrifty. We must know through you positively 
as to the conduct of employees outside of business, the extent of their indulgences 
that makes for good or bad manhood. 

Single Men Under 22. — We want to ascertain positively whether or not these 
young men have anyone dependent upon them, and whom, and to what extent. 
Verify their ages positively. In case of conflict between the office records and the 
man's statements of his age, please give us your best judgment if you can not obtain 
tangible proof. 

General. — Please throw into the investigation of each case a deep, personal inter- 
est and state as briefly and concisely as you can all of the facts and features necessary 
for a well-rounded judgment. The honesty of a man in making frank statements, 
and the home conditions particularly, are of vital importance. Get as much informa- 
tion as you can in- each case to cover the points gone over in talks and outlines with 
you. Please remember that we want the exact truth on all phases of the situation 
rather than quick returns. 

It must be noted, however, that of late the principal emphasis in 
these investigations is laid upon the question of thrift, the relative 
importance of all other conditions described in the foregoing sections 
having been greatly diminished on account of reasons stated elsewhere. 

The judgment formed by the investigator, based upon the informa- 
tion and figures obtained, is presented in writing with a specific rec- 
ommendation. Each case, after being reported upon by the inves- 
tigator, goes before a committee of the education department, which 
passes a final judgment on the case, either approving or disapproving 
the recommendation. 

As may be seen from the foregoing records, investigations are 
repeated in ordinary cases at regular intervals of about six months. 
In special instances more frequent investigations are made. The 
number of times that an employee may have been disapproved has 
no bearing whatever upon his ultimate approval for participation. 



106 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

In every instance of disapproval the employee involved is informed of 
the reasons for such action and suggestions given as to how he may 
qualify. The same is true of cases approved and subsequently dis- 
approved; if a reinvestigation shows that the causes for the previous 
disqualification have been removed the employee is put back on the 
participation roll. 

EXTENT OF ACTUAL PARTICIPATION. 

The rules governing the participation in the benefits of the plan are 
strictly applied; the rigidity of the application, however, depends to 
a very significant extent upon the character of the specific group of 
employees concerned. The company pays very little attention to the 
manner of life, etc., of their office employees. These are approved 
for participation upon ordy a cursory investigation of their respective 
records. It is the opinion of the company that the employees of the 
commercial and clerical occupations, who mostly are native Ameri- 
cans with some education, need not be told how to live decently and 
respectably. For this reason most of the rules and regulations as well 
as the results described in this section of the report concern chiefly the 
manual and mechanical workers, many of whom are of foreign birth 
and unable to speak the English language. 

For convenience of discussion, the nonparticipating employees of 
the company may be classified into a " nonparticipating but eligible " 
group and a " nonparticipating because ineligible" group. The 
former embraces all the employees who for individual reasons have 
not received the benefits of the plan but remain eligible to receive 
them. The latter embraces all employees who, by the very nature 
of the plan, can not immediately or ever come under it inasmuch as 
the plan was designed to benefit only those employees who ,have 
worked six months or more directly for the company. This group 
includes all the newly-hired employees as well as people who are only 
nominally employees of the company — those engaged in building and 
construction, delivery and transportation work done by independent 
firms under contract with the company. It also includes employees 
too young to participate — under 21 years — and girls with no total 
dependents. 

The following table shows the extent of participation for a period 
of 31 months, between April 10, 1914, and November 1, 1916: 



PROFIT SHARING IN THE UNITED STATES. 



107 



TABLE 36.— NUMBER AND PER CENT OF PARTICIPATING AND NONPARTICIPATING 
EMPLOYEES (HOME PLANT) AT SPECIFIED DATES DURING 31 MONTHS ENDING 
NOV. 1; 1916. 



Date. 



Apr. 10, 1914. 
July 17, 1914. 
Sept. 25, 1914 
Dec. 2, 1914. . 
May 12, 1915. 
Nov. 17, 1915 
July 20, 1916. 
Nov. 1, 1916. 



Total 
em- 
ployed. 



13, 251 
9,917 
12, 123 
12, 700 
17, 765 
21, 808 
34, 490 
40.075 



Participating. 



Nonparticipating — 



Number. 



7,567 
8,332 
10, 039 
11, 125 
10, 595 
16, 225 
22, 156 
27, 492 



Per cent. 



57.11 
84.02 
82.81 
87.60 
59.64 
74.40 
64.24 
68.60 



But eligible. 



Number. Per cent 



3,729 
805 
683 
464 
491 
439 
418 
238 



28.14 
8.11 
5.63 
3.65 
2.77 
2.01 
1.21 
.59 



Because ineligible. 



Number. Per cent 



1,955 

780 

1,401 

1,111 

6,679 

5, 144 

11, 916 

12,345 



14.75 
7.87 
11.65 
8.75 
37.59 
23.59 
34.55 
30.80 



On November 1, 1916 — -31 months after the inauguration of the 
plan — of a total average employed of 40,075, 27,492, or 68.60 per cent, 
were participating in the benefits of the plan. The 12,583 nonpartici- 
pating employees (31.39 per cent of all employees) were distributed as 
follows: " Nonparticipating, but eligible, " 238, or 0.59 per cent, and 
"Nonparticipating. because ineligible/' 12,345, or 30.80 per cent. 

The real extent of deliberate disqualification from participation for 
reasons stated elsewhere is shown in the column of the above given 
table entitled "Nonparticipating, but eligible. " The percentage this 
group is of the total force has been on the decrease during the entire 
period, having declined from 28.14 per cent on April 10, 1914, to 2.77 
cent on May 12, 1915. The investigation made July 20, 1916, 28 
months after the plan was put into effect, showed that this group 
has been reduced to slightly over 1 per cent of the total employed. 
By November 1, 1916, the number of those deliberately disqualified 
from participation was further reduced — to 238, or slightly over one- 
half of one per cent of the total working force of the plant. The 
decrease in the percentage participating between December 2, 1914, 
and May 12, 1915, as shown in the table, is due largely to the influx 
of a great number of new employees, the working force of the com- 
pany having been increased by over five thousand between Decem- 
ber 2, 1914, and May 12,1915. 

Table 37 shows in detail the relative status of one of the two 
groups and Table 38 the relative status of the other, on eight differ- 
ent dates during the first 31 months of the operation of the plan, as 
well as the causes for nonparticipation. 



108 



BULLETIN OF THE BUREAU OF LABOR STATISTICS. 



Table 37.— NUMBER AND PER CENT OF EMPLOYEES NOT PARTICIPATING BUT ELI- 
GIBLE DURING 31 MONTHS ENDING NOV, 1, 1916, CLASSIFIED BY CAUSES. 





Employees nonparticipating but eligible. 


Cause of disapproval. 


Apr. 10, 1914. 


July 17, 1914. 


Sept. 25, 1914. 


Dec. 2, 1914. 




Num- 
ber. 


Per 

cent. 


Num- 
ber. 


Per 
cent. 


Num- 
ber. 


Per 
cent. 


Num- 
ber. 


Per 
cent. 


Poor home conditions ' 


2,535 
798 


19.13 

0.02 


428 

189 

134 

40 

14 


4.32 

1.91 

1.35 

.40 

.13 


74 
240 
327 
16 
15 
11 


0.61 

1.98 

2.70 

.13 

.12 

.09 


35 

153 

234 

14 

19 

9 


28 


Lack of thrift 2 


1 20 


No proof of age. . . 


1 84 


Domestic trouble 


209 
70 


1.58 
.53 


.11 


Liars 


.15 


Bad habits 


.07 














Doubtful statement and miscellaneous. 


117 


.88 




























Total 


3,729 


28.14 


805 


8.11 


683 


5.63 


464 


3.65 








May 12, 1915. Nov. 17, 1915. 


July 20, 1916. 


Nov. 1, 1916. 


Poor home conditions * 


131 

228 

80 


1 
0. 74 51 


0.23 
.94 

.45 
.04 
.06 
.15 
.07 
.07 


13 

145 

140 

46 

34 

27 

4 

9 


0.04 
.42 
.40 
.13 
.10 
.08 
.01 
.03 


9 
87 
61 
40 
26 
13 


0.02 


Lack of thrift 2 


1.28 
.45 


206 
97 
9 
14 
32 
15 
15 


.22 


No proof of age 


.15 


Domestic trouble 


.10 


Liars 


20 

14 

10 

2 


.15 
.08 
.06 
.01 


.06 


Bad habits 


.03 


Doubtful statement and miscellaneous . 




2 


.003 


Total 


491 


2.77 


439 


2.01 


418 


1.21 


238 


.59 









i The following is a statement of the company bearing on this point: 

Home comforts and sanitation. — Employees should not sacrifice their family rights, pleasures, and com- 
forts by filling the house with roomers and boarders, nor endanger their children's morals or welfare by 
allowing them to associate with people, about whom they know little or nothing. 

Employees should live in clean, well-conducted homes, in rooms that are well lighted and ventilated. 
Avoid the congested and slum parts of the city, The company will not approve, as profit sharers, men 
who herd themselves in overcrowded boarding houses which menace their health. Select a home where 
there are few boarders or roomers, the surroundings clean and wholesome, paying particular attention to 
the sanitary conditions in the house. 

Do not occupy a room in which one other person sleeps, as the company is anxious to have its employees 
live eomfortably and under conditions that make for cleanliness, good manhood, and good citizenship. 

2 The following is a statement of company bearing on this point: 

Thrift.— Every employee participating in profit-sharing is expected to save some part of the profits allowed 
him. No hard and fast rule can be laid down or adopted in this particular, as responsibilities differ with 
different persons and families. For instance, an employee with a family of wife and six children can not 
be expected to save as much as one with only two or three children, or none. 

The single man with no one dependent upon him is in a position to save all of his profits, and it is from 
this class that the company expects the greatest gain in savings to be made. 

At the end of the first 31 months of tho operation of the plan the 
percentage of "nonparticipating, but eligible" employees was reduced 
from 28.14 per cent to 0.59 per cent. 

The two principal reasons for the existence of this group were "poor 
home conditions" and "lack of thrift," these two causes having 
been responsible for almost nine-tenths of the group. During the 
first 31 months of operation of the plan the percentage of employees 
disqualified on account of "poor home conditions" decreased from 
19.13 per cent to less than one-fourth of 1 per cent; at the same time 
the proportion of disqualified because of lack of thrift decreased from 
6.02 per cent to 0.22 per cent of the average total number employed. 



PROFIT SHARING IX THE UNITED STATES. 



109 



Table 38.— NUMBER AND PER CENT OF EMPLOYEES NOT PARTICIPATING BECAUSE 
INELIGIBLE DURING 31 MONTHS ENDING NOV. 1, 1916, CLASSIFIED BY CAUSES. 



Cause of ineligibility. 


Employees nonparticipating because ineligible. 


Apr. 1 


0, 1914. 


July 17, 1914. 


Sept. 25, 1914. 


Dec. 2, 1914. 


Num- 
ber. 


Per 

cent. 


Num- 
ber. 


Per 

cent. 


Num- 
ber. 


Per 
cent. 


Num- 
ber. 


Per 

cent. 


i Too young; no total dependents 

Girls; no total dependents 


1,955 


. 14.75 


600 
180 


6.05 
1.82 


850 

29G 

252 

3 

( 2 ) 


7.01 

2.44 

2.08 

.03 


623 
285 
200 
3 
( 2 ) 


4.91 

2.24 


Power and construction *.". 






1.58 


Men and teams 1 










.02 


New men 


( 2 ) 




( 2 ) 






Total.; 




1,955 


14.75 


780 


7.87 


1,401 


11.56 


1,111 


8.75 


Too young; no total dependents. 

Girls; no total dependents 




May 1 


2, 1915. 


Nov. 17, 1915. 


July 20, 1916. 


Nov. 1, 1916. 


531 

424 

450 

4 

5,270 


2.99 

2.38 

2.53 

.02 

29.67 


585 
301 

} 757 

3,501 


2.68 
1.38 

3.47 

16.06 


409 

258 

f 


1.19 
. 75 


425 

45 


1.06 
.11 


Power and construction 1 




Men and teams J 


{ 




2 

11, 873 


.005 


New men 


11,249 


32.61 


29.63 


Total 




6,679 


37.59 


5,144 


23.59 


11,916 


34.55 


12, 345 


30.80 







i Construction employees and men on teams are employees of the company only indirectly, inasmuch 
as they are not hired by the company, but by contractors doing work for the firm. 
2 Not reported. 

The relative size of the ''Nonparticipating because ineligible" group 
of employees seems to have been in a constant flux during the first 
31 months; in terms of a percentage of the total employed this group 
was as follows: April 10, 1914, 14.75; July 17, 1914, 7.87; Sept. 25, 
1914, 11.56; December 2, 1914, 8.75; May 12, 1915, 37.59; November 
17, 1915, 23.59; July 20, 1916, 34.55, and November 1, 1916, 30.80, the 
percentage on the last date being more than twice as large as that on the 
first date, in spite of the fact (shown in the table) that the percentage 
ineligible on account of being under 22 years of age had decreased from 
I 14.75 to 1 .06 per cent. The reason for the great increase of employees 
' in this group can be gathered from the table, namely, the great in- 
crease in the total force of the factory during the period immediately 
preceding May 12, 1915, there appearing on that date a total of 5,270 
new employees; that is, employees with a service record of less than 
I six months and not eligible to participate. 

Temporary disqualification from participation. 

During the first 18 months of the operation of the plan a total of 
1,293 employees were temporarily disqualified from participation in 
the benefits of the plan. Of this number, 853, or about two-thirds, 
have been restored to the participating roll within the same period. 
The following table shows the number and per cent of employees dis- 
qualified, classified by the causes for disqualification, as given by the 
company: 



110 



BULLETIN OF THE BUREAU OF LABOR STATISTICS. 



Table 39.— NUMBER AND PER CENT OF EMPLOYEES TEMPORARILY DISQUALIFIED 
FROM AND AFTERWARD RESTORED TO PARTICIPATION DURING 18 MONTHS 
ENDING JULY 12, 1915, BY CAUSES. 



Cause of disqualification. 



Employees who were- 



Disqualified. 



Number. 



Per 
cent of 
total. 



Afterwards restored. 



Number. 



Per 
cent of 
group. 



1. Lack of thrift 

2. Poor home conditions 

3. No proof of age 

4. Liar 

5. Rehired 

6. Money loaned on note without security 

7. Bad habits 

8. No proof of marriage 

9. Living with women not their wives 

10. Under 22 years; no total dependents — 

11. Hoarding money at home 

12. Girls; no total dependents 

13. Domestic troubles 

14. Stealing 

15. Money placed in private banks 

16. Keeping roomers 

17. Wife working 

18. Nonsupport and desertion 

19. Business outside of company 

Total 



532 

255 

152 

92 

59 

58 

45 

23 

19 

17 

13 

13 

4 

3 

2 

2 

2 

1 

1 



41.1 
19.7 
11.8 
7.1 
4.6 
4.5 
3.5 
1.8 
1.5 
1.3 
1.0 
1.0 
.3 
.2 
.15 
.15 
.15 
.08 
.08 



1,293 



100.0 



344 

188 

132 

53 

13 

35 

33 

19 

10 

1 

11 
3 
1 
3 
1 
2 
2 
1 
1 



853 



64.7 

73.7 

86.8 

57.6 

22.0 

60.3 

73.3 

82.6 

52.6 

5.9 

84.6 

23.1 

25.0 

100.0 

50.0 

100.0 

100.0 

100.0 

100.0 



A few notes concerning some of the causes for disqualification as 
listed in the above table may be of some value as illustrating the at- 
titude of the company on some of the problems involved in the ad- 
ministration of the plan. Thus, "3. No proof of age": This means 
that employees, if unmarried, must prove in a satisfactory way that 
they are over 22 in order to qualify for participation. "4. Liar" : By 
this is meant an employee who has made misstatements to the inves- 
tigator of the company with reference to age, number of dependents, 
conjugal condition, etc., in order to get the benefits of the plan. 
"5. Rehired": This means that with refernce to participeation are- 
hired employee is on the same basis as a newly hired one — disquali- 
fied from the benefits of the plan during the first six months of ser- 
vice. "6. Money loaned on note without security": It is the policy 
of the company to discourage indiscriminate loaning of money to 
irresponsible persons. "11. Hoarding money at home": The com- 
pany is endeavoring to make employees keep their savings in regu- 
larly incorporated banking institutions instead of hoarding them at 
home or depositing them in the so-called private banks maintained 
by financially irresponsible countrymen of the employees. " 14. 
Stealing": This refers to the stealing of material, tools, etc. This 
rule, however, is not in operation at the present time, as this offense, 
if not grave enough to cause discharge, is not considered a bar to 
participation. " 19. Business outside of company": This means that 
no participating employee is permitted to have outside business in- 



PROFIT SHARING IN THE UNITED STATES. 



Ill 



terests; in the opinion of the management a worker can not be efficient 
if he has outside work in addition to his work in the factory. 

Over 60 per cent of all the temporary disqualifications from par- 
ticipation were due to two causes: (1) Lack of thrift on the part of 
the employees, and (2) poor home conditions — facts demonstrating, 
in the opinion of the company, that "the profits paid have been 
wrongly utilized." Sixty-four and seven-tenths per cent of all dis- 
qualified by reason of lack of thrift and 73.7 per cent of those dis- 
qualified on account of poor home conditions were put back on the 
participating rolls within 18 months, the period covered by the table, 
[ showing that the objectionable conditions responsible for the dis- 
qualification had wholly or to a great extent been removed. 

The following table shows the relative proportions of participating 
and nonparticipating employees in the various plants of the company 
in the United States on January 12, 1915, one year after the inaugu- 
ration of the plan: 

Table 40.— NUMBER AND PER CENT OF EMPLOYEES* PARTICIPATING ON JAN. 12 

1915, BY PLANTS. 



Location of plant. 



Indianapolis 

Cincinnati 

Atlanta 

Memphis 

San Francisco 

Columbus 

Detroit (commercial 

branch) 

Charlotte 

Louisville 

Long Island City(N.Y.) 

Minneapolis 

Dallas 

Omaha 

Portland 

Seattle 

Cleveland 

Loj Angeles 



Number of em- 
ployees. 


Per 

cent 
par- 
tici- 
pat- 
ing. 


Total. 


Par- 
tic i- 
pat- 
ing. 


Non- 
par- 
tic i- 
pat- 
ing. 


274 
250 
219 
152 
305 
184 

618 
57 
70 
668 
394 
156 
138 
178 
218 
141 
356 


. 67 
64 
67 
58 
137 
84 

288 

27 

36 

350 

208 

83 

79 

109 

140 

95 

243 


207 
186 
152 
94 
168 
100 

330 
30 
34 

318 

186 
73 
59 
69 
78 
46 

113 


24.5 
25.6 
30.6 

38.2 

44.9 ; 

45.7 

46.6 

47.4 ! 

51.4 

52.4 

52.8 

53.2 

57.2 

61.2 

64.2 

67.4 

68.3 ; 



Location of plant. 



Milwaukee 

Denver 

Philadelphia 

Chicago." 

Buffalo 

Oklahoma City 

Houston 

Fargo 

Kansas City 

Cambridge 

St. Louis 

Pittsburgh 

Detroit (manufacturing 

plant) 

Detroit (office) 

Total 



Number of em- 
ployees. 



Total. 



102 
252 
136 
410 
203 

71 
139 

54 
496 
249 
173 
203 



Par- 
tic i- 
pat- 
ing. 



70 
175 

95 
290 
146 

53 
104 

48 
391 
228 
161 
198 



14,255 10,229 
792 772 



21,923 



15,095 



Non- 
par- 
tic i- 
pat- 
ing. 



Per 
cent 
par- 
tici- 
pat- 
ing. 



32 
77 
41 

120 
57 
18 
35 
16 

105 

21 

12 

5 

4,026 
20 



68.6 
69.4 
69.9 
70.3 
71.9 
74.6 
74.8 
75.0 
78.8 
91.6 
93.1 
97.5 

71.7 
97.5 



6,828 



168.9 



i August 31, 1916, the proportion participating rose to 73.5 per cent of the total number employed. 

The highest proportions of participants were found in the plants 
of the company located in Detroit (office), Pittsburgh, St. Louis, and 
Cambridge, Mass., the specific percentages that participated in the 
distributed profits in these plants having been 97.5, 97.5, 93.1, and 
91.6, respectively. These high proportions of participants, as com- 
pared with the other plants of the company, is to be attributed to the 
fact that the plants located in the above given cities have been in op- 
eration longer than any of the others and that, therefore, their rela- 
tive growth has not been as rapid. Such a condition naturally leads 



112 



BULLETIN OF THE BUEEAU OF LABOR STATISTICS. 



to a high proportion of participants in view of the'fact that the largest 
single cause for nonparticipation, as shown in Table 38 and in the fol- 
lowing table, is the presence of new employees, six months of continu- 
ous service being prerequisite for participation. The same reason is to 
be given for the relatively low proportions of participants in the fac- 
tories of the company located in Indianapolis (24.5 per cent), Cincin- 
nati (25.6 per cent), and Atlanta (30.6 per cent)- — the lowest in the 
entire organization. The following table shows that in Indianapolis 
94 per cent, in Cincinnati 96 per cent, and in Atlanta 95 per cent of 
the total nonparticipating employees were still new — that is, with a 
period of service less than six months. 

Table 41. -PER CENT OF NONPARTICIPATING EMPLOYEES, CLASSIFIED BY CAUSES 

JAN. 12, 1913, BY LOCATION OF PLANT. 

[All employees except those of home office.] 





Per cent of nonparticipating employees, by cause. 


Location of plant. 


New em- 
ployees. 


Single 
under 22. 


Home 
condi- 
tions. 


Lack of 
thrift. 


No proof 
of mar- 
riage. 


Miscel- 
laneous. 


Indianapolis 


94 
96 

95 
87 
75 
91 
97 
93 
88 
79 
87 
93 
92 
65 
90 
86 
75 
72 
79 
68 
77 
88 
89 
86 
69 
96 
85 


6 

4 

4 

5 

21 

6 

2 

7 

12 

19 

12 

5 

8 

33 










Cincinnati 










Atlanta 








1 


Memphis 


1 


3 




4 


San Francisco 




4 


Columbus 




2 

.5 




1 


1 >etroit (branch) 






.5 


Charlotte 








Louisville 










Lorn* Island City 








2 


M inneapolis 




1 

2 






Dallas 








Omaha 








Portland 




2 






Seattle 






10 


Cleveland 


11 

22 
28 
19 
32 
20 
8 




3 






Los \ngeles 






3 


Milwaukee 










Denver 








2 


Philadelphia 










Chicago 




1 




2 


Buffalo 


4 






Oklahoma City 


11 

i 






Houston 


11 

31 

4 

5 

50 






3 


Fargo 










Cambridge 










5 
34 
40 

6 


5 

8 

20 

3 






St. Louis 




8 


Pittsburgh 




20 


20 


Detroit (plant) 


73 


15 


3 









The places of location of the various plants of the company shown 
in the preceding table are arranged approximately according to the 
date of their establishment — the Indianapolis plant being one of the 
newest extensions of the activities of the company, and the Detroit 
plant the oldest in point of existence. 

The table brings out two interesting facts which throw considerable 
light on the general nature and workings of the plan : First, that the 
principal reasons for nonparticipation are (a) the presence of new 
employees with a service period of less than six months (the minimum 



PEOFIT SHARING IN THE UNITED STATES. 113 

required for participation) due to the constantly and rapidly increas- 
ing number of employees throughout the year and (b) employees 
under the age of 22, not entitled to participate except under special 
circumstances, namely, when they are the sole support of their 
families. Second, the older the plant the smaller its relative growth 
and the number newly hired, and consequently the smaller the num- 
ber of nonparticipants in the benefits of the plan. 

DISPOSITION OF FORFEITURES. 

As originally announced the plan contained no specific provision 
with reference to the disposition of the shares of those employees who 
for some reason were temporarily disqualified from participation. 
As the specific amount that was to be distributed under the plan 
was not and is not now fixed — depending wholly upon the rates of 
wages and earnings of the employees — such forfeited shares auto- 
matically reverted to the treasury of the company. 

A new rule dealing with this feature of the plan was promulgated 
by the company on August 1, 1915. Under this rule temporarily 
disqualified employees are given the opportunity to recover the for- 
feited shares in whole or in part, depending upon the length of time 
that it takes them to eliminate the objectionable features that were 
the cause of their disqualification. Under this rule employees may 
recover forfeited shares in the following proportions: 

If an employee requalifies within one month he recovers 100 per 
cent of the forfeiture; if within two months, 75 per cent; if within 
three months, 60 per cent; if within four months, 40 per cent; and if 
within five months, he recovers 25 per cent of the forfeiture. 

If an employee does not succeed in requalifying after six months 
his presence in the organization is considered undesirable and he is 
therefore automatically discharged. All the forfeited moneys revert 
to a special charity fund, to be used by the management for any 
charitable purpose it may deem advisable. Out of this fund the 
company pays $10,000 per annum to a tuberculosis sanitarium, for 
the maintenance of beds and treatment. 

BENEFITS ACCRUING TO EMPLOYEES AS SHOWN BY THEIR DAILY EARNINGS. 

In connnection with the information presented below, it must be 
noted that the entire organization of this company is operated on a 
day work basis. There is no piecework or any other individual 
efficiency bonus scheme in existence. 

An analysis of the actual daily earnings of the 49,870 employees of 
this company made on August 31, 1916, showed that 35,250, or 70.68 
per cent, were earning $5 and over per day and 14,620, or 29.32 per 
cent were earning under $5. The proportion that received less than 
$5 per day corresponded very closely to the proportion of employees 
56831°— Bull. 208—17 — -8 



114 



BULLETIN OF THE BUREAU OF LABOR STATISTICS. 



not yet under the benefits of the plan — mostly new men who have 
been in the service of the company less than six months. 

The following two tables give the detailed figures for the employees 
of the entire home plant, and for all the branch plants of the com- 
pany, respectively: 

Table 42.— NUMBER AND PER CENT OF FACTORY AND OFFICE EMPLOYEES WHO 
RECEIVED EACH CLASSIFIED WAGE PER 8-HOUR DAY, AUG. 31, 1916. 

HOME PLANT. 



Classified wage per 8-hour day. 


Factory. 


Office. 


Total. 


Number. 


Per cent. 


Number. 


Per cent. 


Number. 


Per cent. 


Under $5 


9,555 

23, 157 

1,367 

410 


27.71 

67.14 

3.96 

1.19 


338 
428 
112 
150 


32.88 
41.63 
10.90 
14.59 


9,893 

23, 585 

1,479 

560 


27.86 


$5 to $5.99 


66.40 


$6 to $6.99 


4.16 


$7 and over 


1.58 






Total 


34, 489 


100.00 


1,028 


100.00 


35, 517 


100.00 







Over 72 per cent of the factory employees, and a slightly smaller 
per cent of the office employees, were receiving $5 or more per day. 
The somewhat smaller proportion of office employees receiving $5 or 
more per day is to be accounted for by the fact that the office group 
contains a considerable number of boys, under 21, messengers, errand 
boys, etc, employees not old enough to reach the $5 scale. 

The 9,555 factory employees who are classified as earning under $5 
per day received the following daily rates : 

$2.08 to $2.72 7, 941 

$2.73 to $3.99 1, 459 

$4 to $4. 99 155 

In view of the fact that on October 10, 1916, the minimum rate per 
hour for factory employees was raised to 43 cents, the bulk of this 
group — 98 per cent — at the present time earn $3.44 per day. 

For the home plant as a whole, the proportion receiving $5 or 
more per day is over 72 per cent. 

Table 43 gives the daily earnings of employees in the service of 74 
branch plants of the company located all over the United States. 

Table 43.— NUMBER AND PER CENT OF EMPLOYEES WHO RECEIVED EACH CLASSIFIED 

WAGE PER 8-HOUR DAY, AUG. 31, 1916. 

74 BRANCH PLANTS. 



Classified wage per 8-hour day (in dollars). 


Number. 


Per cent. 


Under $5 , : 


4,727 

8,657 

180 

789 




32.94 


$5 to $5.99 


60.31 


$6 to $6.99 


1.25 


$7 and over - 


5.50 








Total... 


14, 353 




100.00 







PROFIT SHARING IN THE UNITED STATES. 



115 



Slightly over 67 per cent of all the employees of the 74 branch 
plants were receiving $5 or more day. The 4,727 employees who are 
classified as earning under $5 per day were receiving the following 
daily rates : 

Under $2 4 

$2 and under $3 4,216 

$3 and under $4 426 

$4 and under $5 81 

COST OF THE PLAN AND ITS BENEFITS TO THE COMPANY. 

During the first year of the operation of the plan an average of 69.7 
per cent of all employed participated in its benefits. 1 The amount dis- 
tributed as "profits" during the same year was $8,434,849, on a regular 
pay roll of $14,021,067, an increase in the labor cost of 60.2 per cent. 2 
^ The management is of the opinion that the operation of the plan 
has resulted in numerous benefits to the company, chiefly in increased 
individual and collective efficiency, development of good will and of 
an esprit de corps ; but, particularly, in stabilizing the working force 
of the plant, which prior to the introduction of the plan was in a 
constant state of flux. In support of the latter contention the man- 
agement presents the following figures showing average number 
employed, numbers discharged, leaving voluntarily and laid off, be- 
fore and after the adoption of the plan, by years: 

Table 44.— NUMBER LEAVING EMPLOY OF COMPANY FOR EACH SPECIFIED CAUSE, 

BY YEARS, 1913 TO 1915. 



Year. 


Average 

number 

employed. 


Number 
discharged . 


Number 

leaving 

voluntarily. 


Number 
laid off. 


Total 
leaving. 


1913 


13, 623 
12, 115 

18, 028 
27,490 


8,490 

926 

27 

1 


39, 575 
5,199 
2,871 
3,592 


2,383 

383 

23 


50, 448 
6,508 
2,931 
3,593 


1914 


1915 


Jan.-June, 1916.. 





An examination of these figures shows that while the number em- 
ployed in 1915 was almost one and one-half times as large as in 1913, the 
number discharged and the number leaving voluntarily in 1913 were 314 
and 1 4 times as large, respectively. From the figures may be derived the 
following percentages of annual turnover: 1913, 370 per cent; 1914, 
54 per cent; 1915, 16 per cent, a reduction of more than 90 per cent 
in the annual turnover in 1915, two years after the plan was put into op- 
eration, as compared with 191 3, one year before the plan was announced. 

Figures were compiled by the management for the purpose of com- 
paring the turnover percentage of the first six months of 1913 with 
that of the last six months of 1915 — two and one-half years later. 
A detailed analysis of those figures shows that during the average 
month of the earlier period 47 per cent of the men left the employ of 
the company, while during the latter period less than 1 per cent per 

i On August 31, 1916, of 49,870 employed, 36,626, or 73. 5 per cent, were participating. 

2 This amount does not include bonuses paid to salaried employees, class 1, as per page 96 of this report. 



116 



BULLETIN OF THE BUREAU OE LABOR STATISTICS. 



month left the employ of the company. To augment its force for the 
year by 100 men, the company had to hire 124 men (on the basis of 
the 1915 record), while during the first six months of 1913 not less 
than 963 men would have been needed to augment the force by 100. 
"In other words/' concludes the statement of the company, " we have 
to line only one-eighth as many men to make the same increase.' ' 

That the plan, with its introduction of the 8-hour day, 1 did con- 
tribute materially toward increasing the individual and collective 
efficiency of the organization is the unanimous testimony of all of the 
officials of the company. Such increases in efficiency, they say, may 
be inferred from the following decreases in the time required for the 
production of specific units of the product manufactured, as well as in 
the significant increases in the per capita output of specific depart- 
ments, also in the more careful attendance to duties as shown by the 
large decrease in accidents and in the punctuality in reporting to work. 

Foremen and heads of departments, say officials of this company, 
insist on the correctness of the claim that the large increases in pro- 
duction described below, while made possible by constant improve- 
ments in methods and machinery, were due very largely to the in- 
creases in wages as well as the introduction of the 8-hour day. These 
changes, they say, have resulted in the creation of an unusual amount 
of good will and in the reduction of the turnover of the working force, 
thus enabling the company to retain the most experienced and efficient 
employees. In this respect the following table is suggestive: 

INCREASED PRODUCTION ATTRIBUTED BY THE COMPANY OFFICIALS CHIEFLY 

TO THE PROFIT-SHARING PLAN. 



Department. 



Motor 

Cylinder timing of machining 

Assembling radiator cores 

Complete radiator assembly 

Fender 

Paint shop 

Gasoline tanks 

Miscellaneous: 

Grinding taper end of drive shaft; 

number per hour. 
Milling cam back, cam shaft; num- 
ber per hour. 
Milling cam face, cam shaft; num- 
ber per hour. 
Grinding center bearing, cam shaft; 

number per hour. 
Grinding cams; number per hour. . . 
Final assembly; average time per car 
General 



Record prior to operation of 
plan. 

6,125 motors in 9-hour day — 

83 minutes 

750 in 9-hour day 

2\ radiators per man in 9-hour 

day. 
38 fenders per man in 9-hour 

day. 
Formerly required services of 

230 men. 
800 tanks by 65 men in 9-hour 

day. 

IS 

13 

12 

30 

5 

2 hours 37 minutes - , 

16,000 men on 10-hour day 
basis made and shipped 
16,000 cars per month. Av- 
erage number of man-hours 
per car per month: 10 (Feb., 
1913). 



Record of Dec. 31, 1914. 



7,200 motors in 8-hour day 

(same number of men). 
50 minutes. 
1,380 in 8-hour day (same 

number of men). 
4 radiators per man in 8-hour 

day. 
50 fenders per man in 8-hour 

day. 
Doing same amount of work 

with 130 men. 
1,200 tanks by 60 men in 8-hour 

day. 

25. 
17. 
14. 
44. 



1 hour 30 minutes. 

15,800 men on 8-hour day basis 
made and shipped 26,000 cars 
per month. Average num- 
ber of man-hours per car per 
month: 4.8 (Feb., 1914). 



* The hours of labor per day in this establishment have been reduced as follows: October, 1913, from 
10 to 9; January, 1914, from 9 to 8. 



PROFIT SHARING IN THE UNITED STATES. 117 

During the first year's operation of the plan, in spite of the some- 
what increased number of employees, as compared with the imme- 
diately preceding year, the number of employees receiving compen- 
sation for accident decreased by 68 per cent, the total of reported 
accidents by 54 per cent, and the proportion of employees losing 
over x>ne day's time on account of injury by 29 per cent. During 
the same period the average proportion of daily absentees was re- 
duced from 10.5 per cent to 0.4 per cent. 

CHANGES IN ECONOMIC AND SOCIAL CONDITIONS ATTRIBUTABLE TO THE PLAN. 

The changes in the economic and social conditions of the employees 
of this company briefly described in the following paragraphs are 
to be attributed, it is believed, to the inauguration and operation of 
the plan for two principal reasons: (1.) The unusually largo in- 
creases in the earnings of the employees, thus making economic 
improvements on an extensive scale possible; (2) the general but close 
supervision maintained by the company over the expenditures of its 
employees (elsewhere described), thus making a thrifty management 
of incomes, better homes, decent and harmonious family life, and a 
wise use of leisure the principal requisites for participation in the 
benefits of the plan. The relatively large financial reward offered by 
the plan for complying with specified conditions of life and the 
financial loss incidental to a failure to comply with them, seem to 
have furnished a powerful incentive for better neighborhood condi- 
tions, more comfortable and up-to-date homes, larger savings 
accounts, and more numerous insurance policies. 

The analysis presented below is based upon the records of the annual 
summaries compiled by the education department of the company. 
The thorough character of the investigations upon which these sum- 
maries are based has been described in detail on pages 97 to 106. The 
figures thus obtained may be considered as reliable and accurate by 
reason of the fact that the statements of fact as furnished by the 
employees concerned or their relatives are carefully verified by the 
investigators of the company through other and impartial sources, 
viz, bank books, land contracts, receipts, marriage certificates, etc. 

The table following presents a summary of the status of the financial, 
neighborhood, and other conditions of the employees of the company 
on the date of the inauguration of the plan, January 12, 1914, and 
on January 12, 1915, one year after the plan had been put into 
effect. - 






118 



BULLETIN OF THE BUREAU OF LABOR STATISTICS. 



Table 45.— ECONOMIC, CONJUGAL, HOME, AND NEIGHBORHOOD CONDITIONS OF EM- 
PLOYEES ON JAN. 12, 1914, AND JAN. 12, 1915. 



Conditions. 



Economic: 

Having bank accounts 

Owning homes 

Owning lots 

Buying homes 

Buying lots 

Having life insurance . 
Conjugal: 

Married 

Single 

Naturalized 

Speaking English 

Home conditions: 

Good 

Fair 

Poor 

Neighborhood conditions: 

Good 

Fair 

Poor 



Per cent of total employees 
investigated on— 



Jan. 12, 1914. Jan. 12, 1915 



44.31 

2.75 

.85 

9.48 

5.13 

19.41 

58.88 
40.01 
33.95 
64.49 

46.77 
30.42 
22.81 

41.43 
39. 50 
19.07 



66.04 
5.08 
1.40 

22.03 
9.69 

43.47 

76.26 
21.93 
44.55 
76.22 

69.53 

27.60 

2.87 

66.22 

31.64 

2.14 



Per cent of 
increase (+) 

or de- 
crease (— ). 









+ 49.0 
+ 84.7 
+ 64.7 
+132. 4 
+ 88.9 
+124.0 

+ 29.5 
- 45.2 
+ 31.2 
+ 18.2 



+ 48. 7 
-9.3 

- 87.4 

+ 59.1 

- 19.9 

- 88.8 



The figures above presented show that the percentage of employees 
buying homes increased 132.4 per cent, of those having life insurance 
124 per cent, and of those buying lots and owning homes 88.9 and 84.7 
per cent, respectively. Increases of about 50 per cent and over took 
place in the percentages of those having bank accounts and owning 
lots. The percentage increase in the proportion of employees living 
in homes rated as good was 48.7 per cent and was accompanied by a 
decrease in those living in fair homes of 9.3 per cent and by a great 
decrease — over 87 per cent — in those living in homes rated as poor. A 
similar change occurred in the neighborhood conditions of the employ- 
ees. The proportion of those living in neighborhoods rated as good 
increased over 59 per cent and was accompanied by considerable 
decreases in those living in neighborhoods rated as only fair or poor. 

The increase in the proportion of married employees during the 
same year was 29.5 per cent and was, as would naturally be expected, 
accompanied by a decrease in the number of those that were single. 
The proportion of naturalized employees increased 31.2 per cent and 
of those able to speak the English language over 18 per cent. Sim- 
ilarly, striking improvements were shown by an investigation made 
January 12, 1916. 

The following two tables present detailed figures showing the 
amounts of money and property owned at the end of the first year's 
operation of the plan, as compared with similar figures obtained 
immediately upon the inauguration of the plan: 



PROFIT SHARING IN THE UNITED STATES. 



119 






Table 46.— RESULTS OF OPERATION OF THE PLAN DURING THE FIRST YEAR OF ITS 
EXISTENCE (JAN. 12, 1914, TO JAN. 12, 1915), AS SHOWN BY BANK DEPOSITS, LIFE 
INSURANCE, VALUE OF HOMES AND LOTS OWNED AND AMOUNT PAID ON THEM, 
ETC.. FOR ALL EMPLOYEES— HOME PLANT. 



Item. 



In banks 

Life insurance 

Homes owned 

Lots owned 

Homes on contract, value of 

Lots on contract, value of 

Homes on contract, amount paid . 
Lots on contract, amount paid . . . 

Rent, paid monthly 

Rent, paid weekly 

Board, paid monthly 

Board, paid weekly 



Total amounts for all 
employees on — 



Jan. 12, 1914. 



1,418.00 

2, 471, 663. 00 

468, 230. 00 

67, 160. 00 

3,282,331.00 

413, 854. 00 

1,111,258.00 

100, 757. 00 

• 58,576.53 

1, 218. 56 

86, 171. 50 

12, 906. 82 



Jan. 12, 1915. 



$3,046,301.00 

6,493,709.00 

933,524.00 

94, 136. 00 

8, 867, 159. 00 

999, 327. 00 

3,237,864.00 

276,722.00 

114,464.19 

2,342.56 

40, 103. 50 

10, 450. 76 



Gain. 



Amount. 



82, 049, 883. 00 

4, 022, 046. 00 

465, 294. 00 

26,976.00 

5,584,828.00 

585,473.00 

2,126,606.00 

175,965.00 

55, 887. 66 

1, 124. 00 

146,068.00 

i 2, 456. 06 



Per 
cent. 



205 

163 

99 

40 

170 

141 

191 

175 

95 

92 

153 

119 



1 Loss. 



In considering the figures presented in this table it should be under- 
stood that the first investigation covered 13,251 employees, while 
the second covered 14,255, 6,636 of whom were hired after June 12, 
1914, and 3,531 of whom were still ineligible for participation in the 
benefit of the plan when the second investigation was made. 

From the table it may readily be seen that the total amount of the 
employees' bank deposits increased over 200 per cent, amounts 
paid in by them on homes 191 per cent, amounts paid in on lots 
175 per cent, total value of homes on contract 170 per cent, and 
the collective value of their life insurance 163 per cent. The 
value of lots owned by them on contract increased over 140 per cent, 
and the total value of homes owned by them almost doubled. The 
total amounts paid out for monthly and weekly board have decreased 
53 and 19 per cent, respectively, by reason of the fact, already re- 
ferred to, that the proportion of boarders decreased because of the 
increase in the proportion of married employees. In connection with 
this table it must be noted that the average number employed dur- 
ing the same period increased less than one-fourth. 

In connection with the decrease shown in the total amounts paid 
out for board it is interesting to note the fact (shown in the following 
table) that the monthly and weekly expenditures for board, per indi- 
vidual, have increased 16.7 and 6.9 per cent, respectively. 

The table following shows the status of the economic and social 
conditions of the individual employee on January 2, 1915, one year 
after the introduction of the plan, per employee. 



120 



BULLETIN OF THE BUREAU OF LABOR STATISTICS. 



Table 47.— RESULTS OF OPERATION OF THE PLAN DURING THE FIRST TWO YEARS 
OF ITS EXISTENCE (JAN. 12, 1914, TO JAN. 12, 1916), AS SHOWN BY BANK DEPOSITS, 
LIFE INSURANCE, VALUE OF HOMES AND LOTS OWNED AND AMOUNT PAID ON 
THEM, ETC., PER EMPLOYEE— HOME PLANT. 



Item. 



In bants 

Life insurance 

Homes owned 

Lots owned 

Homes on contract,- value of 

Homes on contract , amount paid 

Lots on contract, value of 

Lots on contract, amount paid 

Rent . paid monthly 

Rent, paid weekly 

Board , paid monthly 

Board, paid weekly 

Deposited in savings accounts and invested in homes 
and lots 



Average per employee 
on— 



Jan. 12, 
1914. 



Jan. 12, 
1916. 



$75. 20 

186. 53 

35.33 

5.07 

247. 70 

S3. 86 

31.23 

7.60 

14.91 

2.99 

19.40 

5.72 

207. 06 



$203. 62 

505. 66 

98.68 

20.97 

743. 25 

267. 61 

95.55 

26.45 

16.60 

3.02 

23. 09 

5.80 

617.33 



Gain. 



Amount. 



$128. 42 

319. 13 

63.35 

15.90 

495. 55 

183.75 

64.32 

18.85 

1.69 

.03 

3.69 

.08 

410. 27 



Per cent. 



170. 77 
171.09 
179. 31 
313. 61 
200.06 
219. 12 
205. 96 
248. 03 

11.33 
1.00 

19.02 
1.40 

198. 15 



The per capita amount of lots owned increased over 300 per cent. 
Similarly, striking improvements — gains of about 200 per cent — are 
shown in the per capita values of homes and lots on contracts, 
amounts paid on homes and lots, and deposits in savings accounts. 
The per capita amounts paid out in life insurance as well as in value 
of homes owned increased over 170 per cent. The per capita 
amount of monthly board increased slightly over 19 per cent. 

The following table shows in detail the changes in the home and 
neighborhood conditions of the employees at the home plant by num- 
ber and per cent of homes and neighborhoods classified as "good," 
"fair," and "poor" on January 12, 1914, 1915, and 1916: 

Table 48.— HOME AND NEIGHBORHOOD CONDITIONS OF EMPLOYEES ON JAN. 12, 

1914, 1915, AND 1916. 





Homes of employees investigated and reported on 




Conditions. 


Jan. 12, 1914. 


Jan. 12, 1915. 


Jan. 12, 1916. 




Number. 


Per cent. 


Number. 


Percent. 


Number. 


Per cent. 


Home conditions: 

Good 


6,091 
3,961 
2,971 


46.77 
30.42 
22.81 


9,911 

3,934 

410 


69.53 

27.60 

2.87 


25,514 

3.312 

488 


87.04 


Fair 


11 30 


Poor 


1.66 






Total... 


13, 023 


100. 00 


14,255 


100. 00 


29,314 


100. 00 






Neighborhood conditions: 

Good 


5,370 
5,119 
.2,471 


41.43 
39.50 
19.07 


' 9, 440 

4,510 

305 


66.22 

31.64 

2.14 


23, 697 

5,328 

289 


80 84 


Fair 


18.18 


Poor 


.98 






Total 


12,960 


100.00 


14,255 


100.00 


29, 314 


100.00 




i 



PROFIT SHARING IN THE UNITED STATES. 121 

As compared with the status of home conditions at the beginning 
of the year in question, January 12, 1914, the proportion of homes 
rated as "good" increased from 46.77 per cent to 87.04 at the end of 
the second year. A somewhat similar change for the better was found 
at the end of the second year in the neighborhood conditions of the 
employees. The proportion of homes and neighborhoods classified 
as "poor" greatly decreased (from 22.81 and 19.07 to 1.66 and 0.98 
per cent, respectively) during the same period. 

Immediately after the beginning of the plan in 1914 especial 
attention was paid by the department of education of the company 
(at that time the sociological department) to the neighborhood and 
home conditions, family life, general habits, thrift, etc., of the em- 
ployees participating or about to participate. Aside from the gen- 
eral changes in the social and economic conditions of the employees 
during the first year of the operation of the plan, described elsewhere, 
special reference must be made to thrift, which during the first year 
resulted in the total saving of $4,844,724, as per the following 
statement : 

Amount of "profits" accounted for by employees between Jan. 12, 1914, and Jan. 12, 1915, 

shoiving actual savings effected by them. 

Amount in banks $2, 049, 883 

Value of homes 465, 294 

Value of lots 26, 976 

Amount paid on homes on contract 2, 126, 606 

Amount paid on lots on contract 175, 965 

Total 4, 844, 724 

This sum does not include increase in amounts paid out in pre- 
miums on life insurance policies, a figure difficult to arrive at. 

Roughly speaking, of the total of " profits" of slightly over 
$8,000,000 paid out during the first year, almost $5,000,000, or about 
two-thirds, was stored up by the employees for old age, disability, 
and general emergencies. 

Beginning with the second year of the operation of the plan, the 
sequence of emphasis laid by the educational department as shown 
above, namely, home and neighborhood conditions, family life, general 
habits, thrift has been reversed, and thrift is receiving at the present 
time the largest attention. This change of emphasis was not due to 
any change in the policies of the company — good home conditions and 
thrift still being, in equal degrees, prerequisite for participation — but 
to the general improvement in the social and economic conditions of 
the employees which has already taken place as a result of increased 
earnings and the educational work of the company. These two factors 



122 BULLETIN" OF THE BUREAU OF LABOR STATISTICS. 

reduced greatly the proportion of employees in need of advice as to 
home conditions, increasing proportionately the need of advice in 
matters of thrift and the development of what the company calls 
"constructive life." 

Thus, at the present time (November, 1916), aside from having to 
comply with a simple general standard of life, home conditions, etc., 
as described elsewhere, participants are, in addition, required to 
account for the "profits" given to them. This accounting must be 
in the form of savings of some sort or other, no specific form being 
urged. 

The amount of "profits" saved thus during the first two years of 
the operation of the plan is shown in the following table: 

Amount of "Profits" accounted for by the employees between Jan. 12, 1914, and Jan. 12 
1916, showing actual saving effected by them. 

Amount in banks $4, 972, 518 

Value of homes 2, 424. 437 

Value of lots 547, 630 

Amount paid on homes on contract 6, 733, 356 

Amount paid on lots on contract 674, 696 

Total 15, 352, 637 

This sum does not include amounts paid out in premiums on life- 
insurance policies, a figure difficult to arrive at. 

On January 12, 1916, the savings effected by employees of the com- 
pany accounted for $15,532,637, more than three-fourths of the total 
amount paid out to them in "profits" during the two years. This, 
in the opinion of the company, is a gratifying showing of thrift. 

PLAN NO. 3. 

GENERAL NATURE OF PLAN. 

This plan consists of three separate and distinct parts and provides 
for: 

1. Bonuses to employees especially selected for their meritorious 
service, in the form of shares of stock in a building and loan associ- 
ation organized under the laws of the State of Pennsylvania — in 
operation since about 1885. 

2. Bonuses to all employees engaged in manufacturing occupa- 
tions who have a satisfactory record of service of one continuous year 
preceding the distribution date, in the form of an annual cash pay- 
ment of from 5 to 20 per cent of earnings — in operation since 1898. 

3. Bonuses to selected employees in the form of common stock of 
the company at par, same to be paid for by the accruing dividends — 
in operation since 1903. 

In 1914 a total of 3,207 employees, or 66 per cent of the total num- 
ber employed, benefited by one or more of the provisions of the plan. 



PROFIT SHARING IN THE UNITED STATES. 



123 



The following table shows the number and per cent of employees thus 
benefited: 

Table 4=9.— NUMBER AND PER CENT OF EMPLOYEES PARTICIPATING IN EACH CLASS 

OF BONUS IN 1914. 



Class. 


Employees partic- 
ipating. 


Number. 


Per cent. 


One bonus: 

Cash 2, 301 

Common stock 59 


2,521 

449 
237 


78.6 

14.0 
7.4 


Building and loan stock 161 


Two bonuses: 

Cash and common stock 129 

Cash and building and loan 

stock 151 

Common stock and building and 
loan stock 169 

Three bonuses 


Total 


3, 207 


100.0 





Of all the employees benefiting by the three provisions 2,521 ; or 78.6 
per cent, participated in one of the bonuses, receiving either cash or 
stock; 449, or 14 per cent, in two; and 237, or 7.4 per cent, in all of 
the bonuses. 

The following table shows, by nature of the bonuses paid, the dis- 
tribution of participating employees by occupation groups: 

Table 50.— PER CENT OF PARTICIPATING EMPLOYEES RECEIVING EACH KIND OF 
BONUS IN 1914, BY OCCUPATION "GROUPS. 



Occupation group. 


Per cent of participating em- 
ployees whose bonuses are 
in the form of— 


Cash. 


Common 

stock of 

company. 


Building 

and loan 

stock. 


Executive 




15.8 

4.7 

79.5 


15.0 

5.0 

79.4 


Clerical 




Manufacturing 


100.0 





Over 79 per cent of the total employees participating in each of the 
classified bonuses were engaged in so-called manufacturing occupa- 
tions, i. e., were concerned with the actual processes of manufacturing. 

No clerical employees participated in the cash bonus, but 4.7 and 
5.6 per cent of those sharing in the stock distribution, common and 
building and loan, respectively, were found in clerical occupations. 
The percentages of participating employees belonging to executive 
occupations were 15.8 per cent under the common-stock and 15 per 
cent under the building and loan stock phases of the plan. 



124 BULLETIN" OF THE BUREAU OF LABOR STATISTICS. 

DISTRIBUTION OF BUILDING AND LOAN ASSOCIATION STOCK. 






Aside from common-stock distribution, described below, the company 
awards to worthy employees, irrespective of occupations, at the dis- 
cretion of the president and upon recommendation of heads of depart- 
ments, shares of stock, varying from two to five, in a building and 
loan association of Philadelphia, incorporated under the laws of the 
State of Pennsylvania. Such an allotment implies that the company 
obligates itself to make payments for the employee until the stock is 
fully paid for, and money thus accumulated becomes available for 
home-building purposes of the employee. Payments for such stock 
are made by the company at the rate of $1 per month per share until 
the maturity value of $200 is reached. 

The following table shows the annual distribution of building and 
loan stock among employees up to and since 1910: 

Table 51.— DISTRIBUTION OF BUILDING AND LOAN ASSOCIATION STOCK, 1910 TO 1914, 

BY YEARS. 



Years. 



1910 and before 

1911 

1912 

1913 

1914 



Total 
em- 
ployees 
eligible. 



5,294 
5,454 
4,950 
5,189 
4,850 



Employees 
holding build- 
ing and loan 

stock. 



Number. 



Ter 

cent. 



Total 
shares 
held. 



404 
545 
617 
090 
708 



9.3 
10.0 
12.5 
13.3 
14.0 



2,7S7 
3, 012 
3,377 
3,754 
3,901 



Cost to 
company 
per year. 



»!3, 444 
36, 144 

40, 524 
45,048 
40, 812 



On December 31, 1914, 708 employees, or 14.6 per cent of the total 
employed, were holders of 3,901 shares of building and loan stock, 
with a cost to the company for the year 1914 alone of $46,812. 

The following table shows the distribution of employee holders of 
building and loan stock by occupation groups: 

Table 52.— NUMBER AND PER CENT IN EACH OCCUPATION GROUP OF EMPLOYEES 
HAVING BUILDING AND LOAN STOCK. 



Occupation group. 


Number. 


Per cent. 


Executive 


106 

40 

502 


15.0 

5.6 

79.4 


Clerical 


Manufacturing 



DISTRIBUTION OF CASH BONUSES. 



This part of the plan, in operation since 1898, involves the pay- 
ment of annual bonuses in cash, in terms of specified percentages of 
earnings, to all manufacturing employees of the company with a 
record of a continuous service of one year preceding the date of dis- 






PROFIT SHARING IN THE UNITED STATES. 



125 



tribution. Foremen are excluded from these benefits. The per- 
centage of annual earnings paid to individual employees depends 
upon tht department in which they are employed, the range of 
variation in the scale being from 5, the lowest, to 20, the highest. 

During the year ending December 31, 1914, of a total of 4,850 
eligible employees, 2,818, or 58.1 per cent, received bonuses varying 
from 5 to 20 per cent of their respective annual earnings. The fol- 
lowing are the numbers and percentages (of the total employees 
participating) that received classified percentage bonuses. 

Table 53.— NUMBER AND PER CENT OF PARTICIPANTS RECEIVING EACH SPECIFIED 

PER CENT OF EARNINGS AS BONUS. 



Percentage bonus. 


Number. 


Per cent. 


20 


1,162 
359 
270 

1,027 


41.2 

12.7 

9.6 

36.5 


10 


7.5 


5 


Total 


2,818 


100.0 





An examination of these figures shows that 53.9 per cent of the 
total employees participating received 10 per cent or more on their 
annual earnings and 46.1 per cent received under 10 per cent. 

DISTRIBUTION OF COMMON STOCK. 

The stockholders of this company at a special meeting held Novem- 
ber 12, 1902, passed a resolution placing 5,000 shares of the common 
capital stock of the company at the disposal of the president and the 
I board of directors of the company "to be used by them for distri- 
bution at not less than par among the company's emplo3^ees, irre- 
spective of occupations or type of employment" as a reward for 
meritorious service. 

Originally the maximum number of shares to bo allotted to any one 
employee was fixed by the board at 5; during recent years, however, 
in view of the greatly increased market value of the stock, the maxi- 
mum allotted has been reduced to 3 shares. 1 

Employees receiving allotments of common stock make no pay- 
ments on the stock, as it pays for itself by its dividends. When it 
becomes fully paid for, dividends to the holelers are paid in cash. 
Shares of stock allotted under the plan do not become the sole prop- 
erty of the holder until 15 years after allotment. 

The table following shows the number and per cent of employees 
holding allotted common stock December 31, 1914, by occupation 
groups. >*•*-. - 

1 The common stock of the company, par value $100, sells at the present time at about $360. The average 
annual dividend paid on it during the period of existence of the plan, 1903 to 1914, was slightly over 30 
per cent. 



126 



BULLETIN OF THE BUREAU OF LABOR STATISTICS. 



Table 54.— NUMBER AND PER CENT IN EACH OCCUPATION GROUP OF EMPLOYEES 
HOLDING COMMON STOCK OF THE COMPANY. 






Occupation group. 


Number. 


Per cent. 


Executive 


94 

28 

- 473 


15.8 

4.7 
79.5 


Clerical 


Manufacturing 

Total 


595 


100.0 





A total of 595 employees (12.3 per cent of the number of eligible 
employees in 1914) held 3,389 shares of common stock, the respective 
percentages of the total employees holding classified number of shares 
having been as follows: 3 shares each, 303 employees, or 59.2 per 
cent; 5 shares each, 247 employees, or 41.5 per cent; 10 shares each, 
23 employees, or 3.7 per cent; over 10 shares each, 22 employees, or 
3.6 per cent. 

BENEFITS OF THE PLAN TO THE COMPANY. 

In a general way, one of the principal objects sought by the intro- 
duction of the plan, it was stated, was to stabilize as much as possible 
the working organization of the company. The managing officials be- 
lieve that a high percentage of labor turnover is expensive, inasmuch 
as it prevents improvement in the quality of the product manufactured 
and increases the cost of maintaining the working organization. 

That a stable working force has, to a considerable degree, been 
attained may be inferred from two facts: First, a relatively low 
percentage of labor turnover in the manufacturing force of the 
company, as shown in the table presented below; second, a relatively 
small number of employees who are beneficiaries under the common- 
stock distribution plan have forfeited their stock by either voluntary 
leave or discharge. 

Table 55.— PER CENT OF TURNOVER IN THE MANUFACTURING FORCE OF THE 

COMPANY, 1910 TO 1914, BY YEARS. 



Year. 


Percent. 


1910 


30.3 
28.7 
20.8 
31.9 
16.2 


1911 


1912 


1913 


1914 


Average for five-year period . 


25.6 



As will be shown in a study on the turnover of labor in different 
industries to be issued in the near future by this bureau, a percentage 
turnover of 25.6, as shown above, is very moderate. This phe- 
nomenon, so important from the point of view of the quality of the 
product turned out and the expense of maintaining the organiza- 
tion, is attributable, in a considerable degree, it was stated, to the 
operation of the various bonus plans described above. 






PROFIT SHARING IN THE UNITED STATES. 127 

The following is the text of an agreement signed by employees 
to whom common stock is allotted: 

This agreement, made this day of 191 , between Co. (herein- 
after called company), of the first part, and (hereinafter called employee), 

of the second part. 

Whereas the stockholders of company at the special meeting held on the 12th day 
of November, 1902, passed a resolution placing 5,000 shares of proposed issue of 
common capital stock at the disposal of the president and board of directors, to be 
used by them for distribution at not less than par among the company's employees, 
to be allotted and issued upon the terms, conditions, and stipulations, to be fixed 
by said president and board of directors; 

And whereas directors have been advised that the shares can not be actually 
issued saving upon terms of payment therefor in cash, but, being desirous to give 
substantially to employees the benefit of said stockholders' resolution to such extent 
as the same is legal, have decided to enter into this agreement with employee — 
one of others selected by them, said employee having been long in the employ of 
company, and having heretofore rendered faithful services to the same. 

Now this indenture witnesseth that company and employee do agree to and with 
each other as follows: 

1. Company will appropriate for the purposes of this agreement out of the said 
proposed new issue of its capital stock, for the benefit of employee, upon the terms, 

conditions, and restrictions of this agreement, shares of its common capital 

stock, each share being of the par value of $100. These shares thus appropriated 
will not be disposed of otherwise than in accordance with this agreement. An em- 
ployee, in said shares, shall have such rights as by this agreement are accorded to him. 

These shares thus set apart shall not be deliverable, saving upon the conditions 
of this contract, and employee shall have no interest whatever therein saving that 
herein and hereby conferred. 

2. As compensation for employee's services during such time as he shall continue 
in the employment of the company, there shall be paid to him, in addition to what 
shall be due to him in the ordinary way, an additional amount which shall be allotted 
to the trustees hereinafter provided for in each and every year, commencing from the 

day of 191 . This amount in each year shall be a sum equal to the 

difference between five per centum of the par value of such of said allotted shares as 
shall not have been delivered to trustees under the terms hereof, and an amount 
equal to the dividends declared by company during the year upon a number of shares 
like in number, to the additional shares thus allotted, not delivered. The compen- 
sation shall be apportioned, where shares shall have been delivered during the cur- 
rency of the year, at the rate aforesaid up to the time of delivery. 

3. It shall be within the power of company, acting through the board of directors 
or proper executive officers, at its or their sole discretion, at any time hereafter, to 
terminate the employment of employee, either because of his inability further to 
render services which shall be deemed by company valuable, or because of dissatis- 
faction entertained by company acting as aforesaid, or for any other reason deemed 
by company, so acting, as sufficient. The power of termination of employment by 
company is absolute, and may be exercised without any right of question, and with 
the effect of terminating all rights hereunder, saving as herein otherwise specified. 

4. The sum thus allotted to employee, immediately upon the expiration of each 
and every year, shall not be paid to him directly but shall be paid to trustees to be 
appointed and continued in the way and manner hereinafter set forth: Provided, 
however, That if in any year, employee shall desire that out of the sum allotted for 
said year there shall be paid to him one-third or less thereof for his personal use, the 
portion thus designated, not to exceed one-third, shall be paid over to him directly 
by company, in no event to exceed five per centum on the par value of stock, and the 
residue of the allotted sum alone shall be paid to trustees. 



128 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

In such event, wherever hereinafter, the allotted fund is referred to, such reference 
shall be taken as covering merely the residue remaining of the original allotted sum 
for the year. It shall be necessary, however, for employee in each year to make 
the request for the payment of said portion to him. Any request in one year shall 
not be considered as extending beyond said year. Said trustees shall hold the fund 
thus annually allotted to them under and for the purposes of this agreement. To 
such extent as the fund shall pay therefor, company shall, from time to time, deliver 
upon payment therefor by trustees, so many shares of its common capital stock at 
par as can then be paid for. These shares shall be held by trustees, together with any 
residuum of cash, the latter not to bear interest, for the benefit of employee under 
the terms and conditions of this agreement. Dividends upon these shares shall be 
collected by trustees as the same shall be declared, which dividends shall be used 
in the way and manner provided of and concerning the annual compensation. Shares 
of stock thus delivered to trustees, however, shall not be entitled to back dividends, 
but only to such dividends as may be declared thereon after date of delivery. 

5. In case of the death of employee, or of the termination of his employment because 
of his physical or mental inability to discharge his duties, this agreement shall be 
terminated. Trustees shall then transfer to employee, if he be living, or if he be 
deceased, to his personal representatives, the number of shares of stock and the amount 
of surplus cash which then shall be held by them as trustees. No further payments 
of cash or allotments of stock shall thereafter be made. The undisposed of residue 
of the allotted shares shall thereafter remain the property of the company, without 
any right whatever, therein or thereto, in employee or his personal representatives. 

6. If the employment of employee be terminated by company for any cause other 
than his physical or mental inability to discharge his duties, and the judgment of 
company as to the cause of the termination shall be final and conclusive, this agree- 
ment shall terminate at the same time. Trustees shall then turn over to employee 
an amount equivalent to the unused cash in their hands belonging to the trust and to 
the par value of the shares of stock then held by them, even if all the allotted shares 
shall then have been fully paid for. It shall be their duty to dispose of the shares 
thus held in such way and manner as shall be legal, for the benefit of company, first 
deducting the par value of the shares paid over to employee. All rights of employee 
in the allotted shares shall terminate upon said payments being made to him. 

7. In no event, saving in case of death of employee, or termination of his employ- 
ment because of mental or physical inability, shall any shares be actually demanded 

from trustees by employee, until the first day of , and not then unless the 

dividends declared upon said stock' shall have been in sum total an amount equal 
to the par value of the stock and interest. Until said time, saving under said excepted 
circumstances, said shares shall continue to be held by them upon an active trust, 
partly to insure the continued faithful services of employee; but, after the allotted 
shares have been fully paid for under the terms of this agreement, they shall be held 
by trustees thereafter, without any further conditions as to the deduction of interest, 
and the dividends thereon, shall thereafter, as declared, be paid over by trustees to 
employee from time to time. 

On the first day of , if all the shares shall then have been paid for, employee, 

if he shall then be in the employ of company, shall be entitled to the transfer of 
the same to him absolutely and without restriction. 

8. All delivered shares shall be held by said trustees upon an active trust, the 
trustees being entitled to vote the same as though absolute owners thereof. 

9. If dividends be declared in stock and not in cash upon shares, the trustees shall 
hold the shares thus declared as stock dividends in the same way and manner as is 
herein provided of and concerning shares delivered to them upon payment therefor 
in cash. 

10. The trustees shall be , , , , and . In case of 

vacancies in the trusteeship from time to time, company shall fill the same by vote 
of its board of directors. The person thus elected shall have all the rights of the 
trustee originally named. 



PROFIT SHARING IN THE UNITED STATES. 129 

11. The compensation of trustees shall be fixed by company, and shall be paid 
by it out of its own funds. No duty to compensate for said services shall be imposed 
upon employee, 

STOCK SUBSCRIPTION PLANS. 

A clear line of distinction is to be drawn between plans under which 
employees, with the assistance of their employers, but with their 
own money, subscribe for stock of the employing corporation and 
plans involving the distribution of gratuities or bonuses in the form 
of stock instead of in cash. The following section of this report deals 
wholly with plans under which employees, assisted in various wa}^s 
by their employers, subscribe for stock of the employing corporation, 
paying for the same on the installment plan. 

DESCRIPTIVE AND STATISTICAL SUMMARY OF A SELECTED GROUP OF STOCK 

SUBSCRIPTION PLANS. 

A detailed analysis of over 25 such plans reveals the fact that none 
of them involve the principle of profit sharing even remotely. In 
most instances the cost of such plans to the employers is almost 
negligible, the only expense borne by them being the one involved 
in the keeping of the books necessary in the receiving and crediting 
of the partial payments of the subscribing employees. 

Under most of the plans the preferred stock of the employing 
corporation is offered to employees. For this two principal reasons 
may be given: (1) The fact that the fluctuations in the values of the 
preferred stock are usually not as great as the fluctuations in the 
common stock, and (2) the type of investor represented by the sub- 
scribing employees usually prefers the certainty of a fixed return on 
the hives tment to the uncertainty of a potentially larger return on 
the common stock as returns on common stock in a great number of 
industrial corporations are frequently problematical. 

The prices charged for the stock offered, based upon an examina- 
tion of 20 of the largest stock-subscription plans, were as follows: 
Somewhat higher than the prevailing market value in 1 plan; market 
value in 6 plans; from $1 to $5 below the market value in 5 plans; 
from $6 to $10 below the market value in 5 plans; and $10 or more 
per share below the market value in 3 plans. 

Under the great majority of such plans all of the employees of the 
company are eligible to subscribe in amounts determined by the man- 
agement, usually on the basis of the earning capacity of the subscrib- 
ing employee. The amounts of stock allotted vary from about 
one-fourth to the full amount of the employee's annual earnings. 
As a matter of practice, the smaller the relative financial advantages 
offered by the employer, the larger the amount of stock for which 
employees are allowed to subscribe. In only a very few instances, 
however, is the amount of stock that employees may subscribe for 
unlimited. 

56831°— Bull 208—17 9 






130 



BULLETIN OF THE BUREAU OF LABOR STATISTICS. 



In all of the plans studied, except one, interest ranging from 4 to 6 
per cent was charged on the deferred payments of the employees. 
At the same time the usual dividends accruing were credited to the 
subscription accounts. 

Not until the stock subscribed for is fully paid up are the holding 
employees allowed to vote on it. 

Aside from offering the stock at reasonable prices, frequently lower 
than the market price, it is the custom of employers in many 
plans to offer bonuses — a certain sum per share for a limited number 
of years — for the retention by employees while in the employ of the 
company of the subscribed for or owned stock. As in the case of the 
stock dividends, such retention bonuses, until the stock is fully paid 
for, are credited to the subscription account. When stock is fully 
paid for, the dividends as well as the retention bonuses are paid to 
the employee in cash. 

The following table shows the different amounts per share paid 
as retention bonuses under the plans studied: 

Table 56 BONUSES PAID UNDER SPECIFIED NUMBER OF PLANS TO SUBSCRIBING 

EMPLOYEES FOR THE RETENTION OF STOCK (OWNED OR SUBSCRIBED FOR). 





Retention bonuses per sbare. 


Number of 
plans. 




Amount 


Period 


Special 
fund. 




(per year). 


(years). 


11 
1 


None. 
$2.50 




None. 

None. 


3 


3 


2.00 


5 


None. 


2 


3.00 


5 


W 


1 


3.50 


5 


( 2 ) 


2 


4.00 


5 


( 3 ) 


4 


5.00 


5 


( 4 ) 


1 


7.50 


5 


None. 



1 One plan paid $5.91; the other will pay pro rata at the end of the series amount of accumulated for- 
feited bonuses. 

2 Will pay pro rata at the end of the series amount of accumulated forfeited bonuses. 

3 One plan paid $8.86; the other pays none. 

4 Three plans will pay pro rata at the end of the series amounts of accumulated forfeited bonuses; the 
fourth one pays none. 

Of a total of 25 plans examined, 14, or about three-fifths, paid bonuses 
varying from $2 to $7.50 per share for periods ranging from three to 
five years. The table also shows that 1 1 firms out of 25 paid no reten- 
tion bonus whatever on the stock purchased by their employees. 

Under some of the plans the amounts of the bonuses forfeited 
through cancellations revert to a special fund which, at the end of 
the specific subscription series, is distributed pro rata among those of 
the subscribers who have completed their payments. Provisions for 
such a fund were found in seven plans, among which were two of the 
largest in operation. The relative benefits derived by the sub- 
scribing employees from the special fund vary directly with the 
number of cancellations ; the more numerous the latter the larger the 
fund, and, consequently, the amount pro rated per share. 

All of the plans examined without any exception allow their employ- 
ees to cancel their subscriptions at will. Upon cancellation, employees 



PROFIT SHAKING IN THE UNITED STATES. 



131 



usually receive the amounts paid in by them, with interest of from 
4 to 6 per cent, less dividends and other special bonuses that might 
have been credited to their subscription accounts. 

The following table shows for a representative year the sizes of a 
selected group of establishments having stock-subscription plans in 
operation : 

Table 57.— NUMBER AND PER CENT OF ESTABLISHMENTS WITH STOCK SUBSCRIP- 
TION PLANS IN OPERATION HAVING EACH CLASSIFIED NUMBER OF EMPLOYEES. 



Classified number of 
employees. 


Establishments 

having plans in 

operation. 


Number. 


Percent. 


100 and under 300 


1 

2 
< 

2 
2 

1 

7 


4.5 
9.1 

31.8 
9.1 
9.1 
4.5 

31.8 


300 and under 500 


500 and under 1,000 


1,000 and under 3,000 

3,000 and under 5,000 

5,000 and under 10,000 

10,000 and over 


Total 


22 


100.0 





The majority of stock-subscription plans, unlike the profit-sharing 
plans described in a preceding section of this report, were found in 
establishments employing relatively large numbers of employees, 
viz, from one to three thousand. 

The following table shows the extent of the application of the stock- 
subscription plans examined as well as the frequency with which 
\ employees avail themselves of the opportunities offered by the plans : 

Table 58.— EMPLOYEES ELIGIBLE TO SUBSCRIBE FOR STOCK, EMPLOYEES SUB- 
SCRIBING, AND AVERAGE NUMBER OF SHARES SUBSCRIBED FOR, IN EACH OF 21 
ESTABLISHMENTS, IN SPECIFIED YEARS. 





Year . 


Total 
employ- 
ees. 


Employees eligible 
to subscribe. 


Employees subscribing. 


Average 
number 
of shares 
per sub- 
scription. 


Establishment No. 


Number. 


Per cent 
of total 
employ- 
ees. 


Number. 


Per cent 
of total 
employ- 
ees. 


Per cent 
oi eligible 
employ- 
ees. 


1 :. 


1915 
1915 
1916 
1915 
1915 

0) 

1911 

1915 

( 2 ) 

( 3 ) 

( 4 ) 

1915 

1907 

( 5 ) 
1915 

( 6 ) 
( 7 ) 
1911 
1915 
1914 
1914 


3, 550 

151.129 

1,168 

333 

650 

6, 596 

480 

1,178 

28,400 

2,827 

4,334 

644 

160 

22.000 

12, 461 

830 

300 

30,000 

55, 000 

228, 906 

448 


3,000 

78,587 

1,168 

333 

650 

6,596 

183 

1,178 

28,400 

2,827 

4,334 

644 

160 

22, 000 

12,461 

780 

300 

30,000 

2,300 

228, 906 

448 


84.5 

52.0 
100.0 
100.0 
100.0 
100.0 

38.1 
100.0 
100.0 
100.0 
100.0 
100.0 
100.0 
100.0 
100,0 

94.0 
100.0 
100.0 
4.2 
100.0 
100.0 


439 

33,920 

290 

97 

17 

857 

13 

234 

4, 374 

1,413 

1,807 

84 

3 

1,895 

749 

256 

111 

2, 388 

1,347 

46, 948 

5 


12.4 

22.4 

24.8 

29.1 

2.6 

13.0 

2.7 

19.9 

15.4 

50.0 

41.7 

13.0 

1.9 

8.6 

6.0 

30.8 

37.0 

8.0 

2.4 

20.5 

1.1 


14.6 
43.2 
24.8 
29.1 

2.6 
13.0 

7.1 
19.9 
15.4 
50.0 
41.7 
13.0 

1.9 

8.6 

6.0 
32.8 
37.0 

8.0 
58.5 
20.5 

1.1 


2.0 


2 


3.0 


3 


2.3 


4..... 


6.2 


5 


1.9 


6 


6.9 


7 


9.6 


9 


2.3 


10 


7.8 


11 


1.9 


13 


3.0 


14 


1.4 


15 


4.0 


16 


7.2 


17 


3.9 


18 


2.7 


19 


2.5 


20 


8.1 


21 


5.7 


22 

23 


1.9 
2.0 



i Entire series, 1911 to 1915. 

2 Entire series, Aug. 5, 1909, to Aug. 5, 1914. 

s Year ending Jan. 2, 1915. 

* Period from June 15, 1914, to Jan. 1, 1916. 



5 Period from Jan. 15, 1000, to Nov. 14, 1915. 
8 Year ending Jan. 30, V.nr>. 
i Year ending Oct. 1, 1915. 



132 



BULLETIN OF THE BUREAU OF LABOR STATISTICS. 



An interesting feature of this table is the fact that in two- 
thirds of the plans the proportion of subscribing employees to the 
employees eligible to subscribe was less than one-fourth. In 13 out 
of 21 plans studied the proportion subscribing was less than 20 per 
cent, and in about two-fifths of the plans even less than 10 per cent of 
the total number employed. The average number of shares per sub- 
scription differed considerably — from 1.4, the lowest, to 9.6, the 
highest — the average number of shares per subscription for the entire 
group of plans having been slightly over 4. 

The proportion of all subscriptions canceled, as well as the average 
number of shares per cancellation, are shown herewith : 

Table 59.— SHARES OF STOCK SUBSCRIBED FOR, NUMBER AND PER CENT CANCELED, 
AND AVERAGE NUMBER OF SHARES PER CANCELLATION, DURING ONE REPRE- 
SENTATIVE SUBSCRIPTION PERIOD, IN EACH OF 19 ESTABLISHMENTS. 



Estab- 
lish- 
ment 
No. 



1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

17 

IS 

19 

21 

23 



Subscription period. 



5 j'ears . . 
5 months 
3 years . . 

2 years . . 

3 years . . 
5 years.. 
12 years. 
8 years. . 
3 years . . 
5 years . . 

1 year... 

2 years. . 
1$ years . 
5 "years.. 

3 years. . 

4 years . . 
1 year... 
4 years . . 
4 years.. 



Number 

of shares 

subscribed for. 



3, 
102, 



5, 

'I 

34, 
2, 

k 

2, 
h 

27, 



269 
706 
670 
600 
60 
900 
395 
444 
224 
252 
725 
492 
332 
561 
973 
951 
272 
668 
290 



Shares canceled. 



Number. 



739 

1,696 

10 

268 

3 

2,781 

10 

1,684 

84 

5,805 

837 

159 

751 

331 

154 

532 

22 

910 

90 



Per cent 

of shares 

subscribed for. 



22.6 

1.7 

1.5 

44.7 

5.0 

47.1 

2.5 

10.2 

3.8 

17.1 

30.7 

10.7 

14.1 

59.0 

5.2 

27.3 

8.1 

3.3 

31.0 



Average 

number of 

shares per 

cancellation. 



0) 

0) 
C 1 ) 



0) 



4.1 

2.4 
2.0 
3.6 

5.8 



1.7 
4.7 
1.6 

1.8 
1.4 
3.3 
2.1 
2.4 
4.5- 
1.0 



i Not reported. 

The proportion of cancellations, in per cent of the total shares 
subscribed for, was less than 10 per cent in 8 establishments; from 10 
to 20 per cent in 4 ; from 20 to 40 per cent in 4 ; and between 40 and 
60 per cent in 3 establishments. As a rule, the tendency of cancella- 
tions is to decrease with the gradual development of the plan 
for the reason that during the first years, the matter being a novelty, 
many employees contract for shares for which they can not pay. 
In a general way also, it may be stated that cancellations, particu- 
larly under the plans in operation in establishments having large 
numbers of employees, increase (a) with decreases in the total num- 
ber employed, inasmuch as employees laid off or discharged imme- 
diately cancel their subscriptions; and (h) with changes in wages 



PROFIT SHARING IN THE UNITED STATES. 



133 



resulting in decreased earnings. Under the stock subscription plan 
described in detail on pages 148 to 157 of this report, the relative num- 
ber of cancellations in 1904, during which a considerable decrease in 
the rate of wages was made, was four times as large as the relative 
proportion of cancellations during the succeeding year. 

The following table shows the number of cancellations and of 
shares canceled, by causes, during one representative subscription 
period in each of 16 establishments: 

Table 60.— NUMBER OF CANCELLATIONS, AND OF SHARES CANCELED, IN EACH OF 
16 ESTABLISHMENTS, DURING SPECIFIED YEARS, BY CAUSES. 





Year 
ending— 


Cancellations caused by — 


Estab- 
lish- 
ment 
No. 


Leaving 
employ- 
ment. 


Discharge. 


Death. 


Inability to 
make pay- 
ments. 


Other causes. 


All causes. 




Can- 
cella- 
tions. 


Shares 
can- 
celed. 


Can- 
cella- 
tions. 


Shares 
can- 
celed. 


Can- 
cella- 
tions. 


Shares 
can- 
celed. 


Can- 
cella- 
tions. 


Shares 
can- 
celed. 


Can- 
cella- 
tions. 


Shares 
can- 
celed. 


Can- 
cella- 
tions. 


Shares 
can- 
celed. 


1 


Julv 1, 1915 
July 3i; 19151 
Nov. 1,1915 6 
Aug. 31,1913 

( 7 ) 
Dec. 31,1915 
Jan. 31,1915 
May 1, 1915 
Jan. 1,1916 8 
Jan. 1,1915 
Dec. 31,1915 

do 

do'" 

Oct. 1,1915 
Dec. 31,1914 
Dec. 31,1914" 

Total.. 
Per cent 


47 
2 501 

2 38 

2 

96 

12 

211 
10 

210 
47 
40 
25 
15 
6 
30 
39 


226 

2 1,148 

2 135 

3 

576 

19 

324 

46 

410 

61 

267 

77 

71 

. 18 

92 

52 


5 
( 3 ) 

( 3 ) 


15 
( 3 ) 

( 3 ) 


3 

24 


8 
73 


16 


44 






71 
707 

75 

2 

479 

15 
522 

35 
412 

93 
216 

57 

96 
9 

68 

65 


293 


2 


M82 
11 


» 475 
42 


1,696 


4 


26 


91 


238 


5 






3 


6 
9 


144 


834 


6 


62 


48 


278 


1S5 
3 

169 

18 

5 


1,031 

6 

271 

69 

15 


2,781 
25 


11 

12 


67 

5 
61 

9 
( 9 ) 

6 
56 

2 
17 

5 


100 
22 

112 
13 

( 9 ) 

14 

102 

3 

59 

7 


4 
2 
6 


8 
15 
10 


71 


134 


837" 
152 


13 
14 


130 
37 

141 

14 

24 

1 

18 
21 


204 
57 

694 

26 

51 

1 

109 
31 


751 
131 


16 
17 

18 


2 

1 


10 
4 
2 


33 
9 


333 
66 


1,304 
187 
226 


19 






22 


21 


3 


25 






2S5 


23 






90 
















1, 329 
45.5 


3,525 
38.9 


377 
12.9 


1,281 
14.2 


54 

1.8 


217 
2.4 


547 
18.7 


1.720 
19.0 


615 
21.0 


2, 308 
25.5 


2,922 
100.0 


9, 051 
100.0 



1 Five months. 

2 Including those caused by discharge. 

s Included under "Leaving employment." 

4 Including subscriptions canceled on account of disability, 13; leave of absence, 12; temporary lay-off, 
96; other causes, 61. 

5 Including shares canceled on account of disability, 42; leave of absence, 43; temporary lay-off, 227; 
other causes, 163. 

6 Two years. 

1 Entire series of 1911. 

8 June 15, 1914, to Jan. 1, 1916. 

s Discharge does not cause forfeiture or cancellation, 
'o Two years and 9 months. 
11 Three years. 

Of the canceled subscriptions, 58.4 per cent, representing 53.1 
per cent of all the shares canceled, were occasioned through two 
principal causes, leaving of service and discharge; 18.7 per cent of 
the canceled subscriptions were due to the employee's alleged inability 
to continue the making of the stipulated payments. 

The following table shows the proportion of subscribers in each of 
the four principal occupation groups in 19 establishments. 



134 



BULLETIN OF THE BUREAU OF LABOR STATISTICS. 



Table 61.— NUMBER AND PER CENT OF SUBSCRIBING EMPLOYEES IN EACH OCCUPA- 
TION GROUP, DURING ONE REPRESENTATIVE SUBSCRIPTION PERIOD (19 ESTAB- 
LISHMENTS). 



Occupation group. 


Subscribers. 


Number. 


Per cent. 


Executive 


8,631 

10, 884 

174 

25, 130 


19.2 

24.2 

.4 

56.2 


Clerical 


Sales 


All others 


Total 


44,819 


100.0 





More than one-half of the subscribers were found in the occupation 
group "All others." Inasmuch as common laborers very seldom, if 
ever, take advantage of the plans, it may be assumed with a reason- 
able degree of probability that the classification " All others" included 
employees who were engaged in manual and mechanical occupations 
requiring some degree of training or skill. 

Financial advantages accruing to subscribers. 

In the following table is given an estimate of the financial advan- 
tages offered by the stock subscription plans examined to employees 
earning $1,000 yearly. It is evident that such advantages, if any, 
may accrue to subscribing employees in either all or some of the 
following ways: (1) In the relatively lower price at which the stock 
may be had, as compared with the prevailing market value; (2) by 
special bonuses offered for the retention of the subscribed for or 
already owned stock; (3) by the difference between the rate of 
interest charged on the deferred payments and the dividends credited; 
and (4) from the proportionate share in the special fund which 
accumulates from the forfeited bonuses of canceled subscriptions, 
and which becomes distributable at the end of the subscription series. 

The total financial gain under each of the plans is shown in column 
nine of the following table. By dividing the total amount of possible 
gain into the aggregate earnings of a hypothetical subscriber earning 
$1,000 per year for the period of years covered by the subscription 
series, there is obtained what is called in column eleven the "per cent 
of gain on total earnings." In this estimate as calculated all the 
speculative features of the transaction were disregarded. 



PROFIT SHARING IN THE UNITED STATES. 



135 



ABLE 63.— ESTIMATE OF GAIN WHICH MAY ACCRUE TO A STOCK-SUBSCRIBER 
EMPLOYEE EARNING 81,000 PER YEAR IN EACH OF 18 ESTABLISHMENTS. 



Es- 

tab- 

lish- 

ment 

No. 



Sub- 
scrip- 
tion 

series. 



1914 

1915 

i 1916 

U913 

U911 

U912 

1914 

U914 

1909 

11909 

1914 

1913 

1914 

11910 

1913 

1912 

1914 

1914 

11912 

11912 



Number 
of years 
in which 

pay- 
ments 
may be 

com- 
pleted. 



Maxi- 
mum 

stock 

sub- 
scription 
allowed 

per 
81.000 of 
earnings. 



S200 

300 

200 

1,000 

1,000 

200 

200 

200 

1,000 

1,000 

300 

200 

300 

500 

300 

200 

1,000 

200 

300 

300 



Amount 

of fixed 

bonus for 

entire 

period. 



875. 00 



20.00 
100.00 



30.00 
20.00 
40.00 
150.00 
200.00 
75.00 
30.00 
75.00 



50.00 



15.00 
52.50 



Excess 
of divi- 
dends 
over 
interest 
paid for 
entire 
period. 



820.00 
24.00 
10.00 
50.00 

100.00 
30.00 

2 30. 00 
20.00 



816. 50 

2.00 

150.00 

40.00 



100.00 
112. 50 
18.00 
30.00 
20.00 
15.00 
50.00 
80.00 



20.00 

8.00 

95. 00 

60.00 

15.00 

8.00 

45.00 

130. 00 



859. 10 
88.60 
( 4 ) 



20.00 



16.00 



39.00 
52.65 



18.00 



15.00 



1.9 
2.0 
.6 
6.0 
2.8 
1.2 



1.. 

2.. 
3.. 
4.. 
6.. 
8.. 
9.. 
9.. 
10. 
10. 
11. 
12. 
13. 
14. 
17. 
18. 
19. 
21. 
22. 

i 

i Preferred stock. 

2 Based on normal dividend of 8 per cent. 

3 Not including a stock dividend of 33£ per cent distributed in first year of series, in which subscribers 
shared. 

4 Amount not known until end of series. 

5 Not including special fund, amount not known until end of series. 

6 Employees earning less than 81,300 per year not included in plan. 

For convenience the estimated percentage gains on earnings shown 
in the foregoing table have been summarized as follows : 

TABLE 63.— CLASSIFIED PER CENT OF GAINS ON EARNINGS (20 PLANS). 



Excess of 
market 

price 
over sub- 
scription 
price. 



Special 
fund 
for sub- 
scribers 
retaining 
stock 
until 
end of 
period. 



Total 
gain 
from 
stock 
for 
entire 
period. 



895.00 
40.50 
32.00 

300.00 

140.00 

60.00 

70.00 

68.00 

3 304. 10 

448. 60 

5 202. 50 

40.00 

150.00 

150.00 
15.00 

136.00 
80.00 
54.00 

105. 15 
33.00 



Total 
earn- 
ings 
for 
entire 
period. 



85,000 
2,000 
5,000 
5,000 
5,000 
5,000 
5,000 
5,000 
5,000 
5,000 
5,000 
3.000 
5,000 
2,000 
5,000 
5,000 
4,000 

8 1,300 
5,000 
3,000 



Per 

cent 

of 

gain 
on 
total 
earn- 
ings. 



4 

4 

1 

1 

1 

3 



7.5 

.3 

2.7 

2.0 

4.2 

2.1 

1.1 



Classified per cent of gains. 


Number 
of plans. 


Under 2 per cent 


8 
6 
2 
3 
1 


2 and under 4 per cent 

4 and under 6 per cent 

8 and under 10 per cent 

Total 


20 





Under 14, or 70 per cent, of the plans the estimated financial ad- 
vantages to the employees amounted to less than 4 per cent of their 
earnings during the period covered by specific subscription series. 
In over one-third of the plans the estimated benefit amounted to 
less than 2 per cent on earnings, slightly above 1 per cent mostly. 
Only one plan offered a financial advantage exceeding 8 per cent on 



earnings. 



136 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

ANALYSIS OF WORKING OF FOUR TYPICAL PLANS. 
Plan No. 1. 

The essential features of this plan, as announced on January 1, 
1915, are as follows: 

(a) Any employee who on January 1, 1915, has been continuously in the service of 

two years or more may purchase one share of stock at $110 per share for each 

$300 of his or her annual wages, but not exceeding 10 shares to any one employee. 

(6) All purchase agreements must be filed with immediate superior officers on or 
before January 30, 1915. 

(c) Continuous service and "rate of pay" under this plan shall be determined in 
the same manner as under the regulations of the Employees' Benefit Fund Plan. 

(d) The following table shows the maximum number of shares which any employee 
may purchase, but any employee may purchase one or more shares up to the maximum 
he is entitled to purchase : 

Employees receiving at Dec. 
31 ; 19*14, rate of pay equiv- May purchase not 

alent to a rate per year of— exceeding — 

$300 or less 1 share. 

Over $300.01 to $600, inclusive 2 shares. 

Over $600.01 to $900, inclusive 3 shares. 

Over $900.01 to $1,200, inclusive 4 shares. 

Over $1 ,200.01 to $1,500, inclusive . . .• 5 shares. 

Over $1,500.01 to $1,800, inclusive 6 shares. 

Over $1,800.01 to $2,100, inclusive 7 shares. 

Over $2,100.01 to $2,400, inclusive 8 shares. 

Over $2,400.01 to $2,700, inclusive 9 shares. 

Over $2,700 10 shares. 

Payment for the stock must be made beginning w T ith March, 1915, 
in monthly installments of $2 per share, to be deducted from wages 
until stock is paid for, but payments may not be completed before 
March 1, 1917. Dividends are applied toward payment, and interest 
of 4 per cent is charged on unpaid balances. 

Stock purchased, until payments have been completed, is to be 
held by three trustees appointed by the board of directors. When 
the stock has been fully paid for, the subscriber may keep or sell it, 
as he chooses, but before then no assignment, pledge, or sale of 
rights is permitted. 

If a subscriber-employee leaves the company's service or dies in 
the service before his payments have been completed, the net- amount 
paid in is returned in cash. If he leaves or dies after March 1, 
1917, the amount still unpaid may be paid in and the stock taken up. 

If for any reason other than leaving service, temporary absence, or 
death, any employee desires to withdraw from the purchase agree- 
ment, and if his reasons appear sufficient to the trustees, he may 
receive back the total amount paid in, together w T ith 4 per cent 
interest. 

Of a total of 151,129 employed, 78,587, or 52 per cent, were eligible 
to subscribe for stock under this plan; 33,920, or 22 per cent of the 



PROFIT SHARING IN THE UNITED STATES. 



137 



total employed, and over 43 per cent of all the eligihles, took ad- 
vantage of the offer of the company and subscribed for a total of 
102,706 shares of common stock. Over two-thirds of all the sub- 
scriptions were for three shares or less, one-third of all having been 
for two shares only. Less than one-tenth of all the subscriptions were 
for six shares or more. 

During the first five months of the operation of the plan 2.1 per cent 
of all the subscribers canceled 1.7 per cent of all the shares subscribed 
for, the average number of shares per cancellation having been 2.4, 
as against 3 per original subscription, showing, in a general way, 
that employees holding small numbers of shares were responsible to 
a great extent for the cancellations. Most of the cancellations — over 
two-thirds of them — were caused through employees leaving the 
service of the company. 

The types of employment or occupations of the subscribers under 
the plan are shown in detail in the following table : 

Table 63.— NUMBER OF STOCK SUBSCRIBERS AND OF SHARES HELD, BY 

OCCUPATIONS. 






Occupations. 



General officers 

General staff assistants 

Attorneys 

Accountants 

Engineers 

Main operating department heads. . .- 

Assistants to main operating department 
heads . . .-. 

Managers and assistant managers 

Collectors and canvassers 

Cashiers, tellers, paymasters, etc. . . ^ 

Operators 

Foremen 

Right of way agents 

Inspectors 

Inside plant force 

Outside plant forces 

Doctors, matrons, nurses, etc 

Clerks, including storekeepers, stock- 
keepers, and students (except operators). 

Stenographers and tj r pists 

Draftsmen 

Messengers 

Artisans 

Unskilled workers 

Manufacturing shop, warehouse, distribut- 
ing house, and installation workers 

Total 



Stock subscribers. 



Males. 



138 
113 

65 

436 

1,321 

79 

1,949 
848 

1,178 

209 

43 

1,916 
156 
730 

4,348 

4,105 
• 2 

3,820 

40 

274 

54 

299 

451 

1.170 



23,744 



Females. 



2s 



25 

63 

11 

211 

,127 
1 



97 

1,635 
821 



10,176 



Total. 



138 
118 

65 

464 

1.321 

79 

1,974 

911 

1,189 

420 

7,170 

1.919 

156 

738 

4,352 

4.105 

99 

5.453 
861 

274 

57 
299 
493 

1,265 



33,920 



Shares held by- 



Males. 



1.267 

936 

551 

2,276 

7.177 

727 

11,286 

2,975 

3,990 

784 

116 

7,248 

703 

2,415 

12.626 

11.007 

9 

11,348 
124 

887 

82 

784 

933 

2,958 



Females. 



26 



63 



73 

181 

19 

435 

12,718 

1 



20 

8 



179 

3,414 
2,140 



4 
"60 
156 



83.209 



19,497 



Total. 



1,267 
962 
551 

2.339 

7,177 
727 

11,359 
3,156 
4,009 
1.219 

12,834 

7.254 

703 

2,435 

12.634 

11.007 
188 

14.757 

2.264 

887 

86 

784 

993 

3,114 



102,706 






An inspection of the foregoing table shows that almost one-third 
of the total number of subscribers were females and that every branch 
of the service of the company is represented among the subscribers. 
Considerably over one-half of the total number of subscribers belonged 
to occupations other than executive, clerical, or commercial, the bulk 
of them, apparently, having been engaged in mechanical and manual 
occupations. 



138 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

Plan No. 2. 






This plan was put into operation in 1909, when 12,500 shares of 
preferred stock, at $115 per share, and 15,000 shares of common stock, 
at $75 per share, were offered for subscription to officers and employees. 
The amount of subscription in any case was limited to the amount 
of annual wages or salary. 

Minimum monthly installments were to be $1.50 per share for pre- 
ferred stock and $1 per share for common stock, the stock to be fully 
paid for within five years, with an interest charge in the meantime of 
5 per cent on unpaid balances. Dividends were to he credited from 
the time of allotment. 

As soon as the subscription payments were completed the stock 
was to be issued to the subscriber; but when an allotment included 
both preferred and common stock no certificate was to be issued 
until the entire subscription was paid, and then certificates for both 
classes of stock were to be issued. 

As an inducement to subscribers to retain their stock and "to have 
and show the active interest in the business of a stockholder or work- 
ing partner," a special allowance of $4 per share of preferred stock and 
$3 per share of common stock for five consecutive years beginning 
with. August, 1910, was offered. This special allowance was to be 
credited to subscribers whose subscriptions were 4 still in force, yet not 
fully paid, but paid in cash to employees who had fully paid for their 
stock. 

Subscribers who discontinued payments at any time before their 
subscriptions were fully paid up would forfeit these special allowances, 
which would then go into a special fund, credited with 5 per cent annual 
interest. At the end of the five-year period, the total amount thus 
accumulated would then be divided into as many parts as would equal 
the number of shares of preferred stock plus two-thirds of the number 
of shares of common stock which had remained continuously in the 
hands of the subscribers for five years. Each subscriber would then 
be awarded as many parts as the number of shares then held by 
him under this plan would entitle him to; i. e., one part for each share 
of preferred stock and one part for each one and one-half shares of com- 
mon stock. 

The series of stock subscription described above was completely 
closed out in 1915, with the following results : 

Of a total of 28,400 employed by this company, 4,374, or 15.4 per 
cent, availed themselves of the opportunity offered, and subscribed 
for 34,252 shares of common and preferred stock, in almost equal 
proportions. Over 86 per cent of all the subscriptions were for three 
shares or less, 55.8 per cent of all the subscribers contracting for one 
share only. Prior to the closing of the series, 1,247 subscribers can- 
celed subscriptions amounting to 5,865 shares, making the propor- 






PROFIT SHARING IN THE UNITED STATES. 139 

tions of total subscribers and shares that were canceled 28.5 per cent 
and 17.1 per cent, respectively. From the fact that the proportion 
of subscribers who canceled their subscriptions was considerably 
larger than the proportion of shares canceled by them, it may be 
inferred that employees who subscribed for a small number of shares 
were responsible for most of the cancellations. This conclusion is 
partly supported by the fact that while the average number of shares 
per subscription was 7.8, the average number of shares per cancella- 
tion was only 4.7. 

On December 23, 1915, this company in a circular to its employees 
announced the establishment of a new plan, as follows: 

To the employees of Co., of ■ — , audits subsidiary companies: 

In order to reward continuous service and assist employees to become stockholders 
in this company and share in its profits, the directors announce the following 

PROFIT-SHARING PLAN: 

1. Any employee may subscribe for a profit-sharing certificate for $50 or any multiple 
thereof up to the sum of $1,000. The payments for the certificate shall be made 
in specified sums of not less than $1 nor more than $25 per month, which may be regu- 
larly deducted from the employee's wages. The amount thus agreed to be paid must 
be sufficient with the other credits hereinafter provided, to pay such certificate in 
full on or before January 2, 1921. 

Whenever the employee is unable to work for the company because of shutdown or 
of his sickness or accident disability, his payments may be temporarily reduced or 
suspended. 

Each employee who subscribes for a profit-sharing certificate before March 1, 1916, 
and has earned $100 or more during the year 1915, will also be credited on such cer- 
tificate at the date of his subscription with a sum equal to 1 per cent of his wages during 
1915. If he has been in the company's employment throughout that year, this credit 
will be not less than $10. 

2. The company agrees to credit annually on January 2 of each year, from 1917 to 
1921, inclusive, on the profit-sharing certificate, in addition to the employee's pay- 
ments thereon, the following: 

(a) An amount equal to 1 per cent of the employee's wages earned during the pre- 
ceding calendar year, if such wages amount to not less than $100 and the employee 
is still working for the company. If he has been in the company's employment 
throughout the preceding year, this credit will be not less than $10. 

If any holder of a profit-sharing certificate, because of a shutdown in his department 
or his sickness or injury disability, is absent from work on January 2 of any year prior 
to and including 1921, the company will make the above credit if he resumes work 
not later than April 1 of the same year, either when the work in his department is 
resumed or upon his recovery from such disability. 

(6) Interest at the rate of 5 per cent per annum on all his payments and credits on 
his profit-sharing certificate. 

In case the holder of a profit-sharing certificate ceases to be an employee of the 
company, the amount to the credit of his certificate shall be payable to him in cash 
within 30 days thereafter, after which date it will not bear interest. 

3. Employee s options.— Every employee holding a profit-sharing certificate shall 
have the right : 

.(a) To apply the amount credited upon his profit-sharing certificate to the pur- 
chase, from the company, of its common stock at $3 per share below its then market 
price at any time when such amount is sufficient to pay for one or more such shares; or 



140 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 



(b) To receive in cash the full amount of his certificate, with accrued interest, 
any time after such certificate is fully paid ; or 

(c) To leave with the company until January 2, 1921, the amount of his paid-up 
profit-sharing certificate, and (if he continues in the employ of the company) to receive 
in cash on every January 2, to and including the year 1921, interest thereon at 5 per 
cent per annum and also an amount equal to 1 per cent of his wages for the preceding 
year but not less than $10; and 

(d) To subscribe from time to time for additional profit-sharing certificates upon 
the terms and conditions above set forth, provided the total amount of certificates 
subscribed for by any employee shall not exceed $1,000, and his payments thereon 
shall not exceed $25 per month. 

4. Special profit-sharing to employee stockholders. — The company agrees to pay to 
each employee, while he shall continue to be an employee and to own stock under 
this plan, in addition to the dividends on his stock, an amount equal to the extra 
dividend which he would receive upon his said stock if the entire excess of the net 
profits of the company for each calendar year prior to January, 1921, over and above 
an amount equal to 6 per cent on the moneys invested in the company's business 
during such year, were distributed pro rata to all the holders of its common stock. 
The company guarantees that this amount shall not be less than $2 a year for each 
share of stock so held by the employee. The guaranteed $2 per share will be paid 
by January 10 and the remainder as soon thereafter as the balance sheet has been 
approved by the board of directors. 

The 'moneys invested in the company's business" for each year shall be the capital 
stock and surplus as shown by its annual balance sheet as of December 31 of the 
preceding year approved by its board of directors. The "net profits" for each year 
shall be the amount shown as net profits upon the company's balance sheet as of 
December 31 for that year approved by its directors. 

Such additional annual payments to employee stockholders, for any year, shall 
be paid upon only such shares of stock as are acquired hereunder prior to February 1 
and held until the end of that year. 

5. This profit-sharing plan ends January 2, 1921. The company does not agree to 
continue any of the rights, interest, or profit sharing above outlined beyond January 2, 
1921. It hopes, however, to be able to announce an extension of the plan beyond 
that date. 

6. Participation in this profit-sharing plan is not compulsory upon any employee. 
Failure to accept any of the offers made by the company under this plan will not in 
any way affect the employment or standing of anyone who is now or may hereafter 
be in the service of the company. 

The following tables have been prepared to show how monthly payments of $1 and 
upward will pay for profit-sharing certificates in amounts ranging from $50 to $1,000. 
While the profit-sharing plan provides that the yearly credit shall be 1 per cent of the 
employee's wages, these tables show in each case a credit of $10, this being the 
minimum amount which will be credited to each subscriber who has been in the 
company's employment throughout the preceding year. 






PROFIT SHAKING IN THE UNITED STATES. 



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142 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

EXAMPLE 1 — $50 CERTIFICATE. 

A $50 certificate subscribed for during January, 1916, by an employee who has 
worked for the company one year or more and who pays thereon $1 each month, will 
be fully paid by January 2, 1918, as follows: 

1 per cent of wages for 1915, 1916 and 1917 (minimum) $30. 00 

24 monthly payments of $1 each 24. 00 

5 per cent interest to Jan. 2, 1918 2. 70 

Total 56. 70 

He may draw in cash the full amount on January 2, 1918, or he may leave this amount 
with the company until January 2, 1921, and if he continues in the employ of the 
company he will receive in cash on January 2, ]919, $12.84, on January 2, 1920, $12.84, 
and on January 2, 1921, $12.84. The principal sum, $56.70, will also be paid on 
January 2, 1921. 

EXAMPLE 2 — S200 CERTIFICATE. 

An employee, .who has worked for the company one year or more, subscribing 
during January, 1916, for a $200 certificate with a monthly payment of $2, will have 
to his credit on January 2, 1919, $120.50, of which he will have paid in $72. If he 
then withdraws a sufficient amount to purchase one share of stock at $3 below the 
then market price, he will continue to receive, as credits on the balance of his account, 
interest at 5 per cent and the percentage of his wages as set forth in this plan. He will 
also receive dividends upon his share of stock in common with all other stockholders 
and an additional annual payment on account of his share of stock guaranteed to be 
not less than $2, and which, on the basis of the earnings of the company for the year 
1914, would amount to $5.20 each year. 

ADDITIONAL PAYMENTS TO EMPLOYEE STOCKHOLDERS. 

The following statement shows how the rate of additional payments to employee 
stockholders, described in section 4, will be figured: 

Capital stock and surplus Dec. 31, 1913: 

Preferred stock $30, 000, 000 

Common stock : 40, 000, 000 

Surplus 19, 608, 797 

89, 608, 797 

Net profit for year 1914 7, 463, 231 

Deduct 6 per cent on above capital stock and surplus. . 5, 376, 527 

"Excess net profits" on which rate of additional payment 
is figured 2, 086, 704 

This balance. $2,086,704, is equal to 5.2 per cent on the $40,000,000 common stock, 
and represents an additional payment of $5.20 per share. This statement is figured 
on 1914 business merely for illustration, and does not fix the rate of additional pay- 
ment for any year. The company guarantees, however, that this additional payment 
shall amount to at least $2 per share each year. Any increase in the dividends on 
the common stock will be shared in by the employee stockholder without any reduc- 
tion being made in the additional payments to which he may be entitled under this 
plan. 

Plan No. 3. 

Under the provisions of this plan common stock (series of 1914) is 
offered for subscription at $60 per share to officers and employees 
whose annual wages or salaries are $1,300 or over. The maximum 
amount to be subscribed for by any employee is determined in each 



PROFIT SHARING IN THE UNITED STATES. 143 

instance by the executive committee in charge of the plan, due consid- 
eration being given to the salary and importance of position of each 
employee. 

The maximum amount of stock that an employee may subscribe 
for varies from 10 per cent of his annual earnings, hi the case of the 
employees earning $1,300, to 20 per cent of annual earnings in the 
case of employees earning $10,000 per year or more. 

Payments on subscriptions are to be made in monthly installments, 
i deducted from the salary or wages in such amounts as the employee 
may desire, subject to a minimum of $6 per share. Interest at 5 
per cent is charged on all unpaid balances and dividends are credited to 
the employee's account until the subscription is fully paid. Employees 
canceling their subscription before the stock is fully paid for, or who 
have failed to pay their installments for three consecutive months, 
have the exact amount of their payments returned to them, together 
with 5 per cent interest; they forfeit, however, the dividends and 
the special allowances referred to below. 

As soon as the payments on the stock have been completed, the 
shares are issued in the employee's name, to dispose of as he chooses. 
As a special inducement to keep it, however, the company pays $3 
| per share for five successive years to those exhibiting each year a cer- 
tificate from an authorized official of the company stating that the 
employee has been continuously in the company's employ for the 
preceding year and "has shown a proper interest in its welfare and 
progress." At the end of five years he receives an additional allow- 
ance, which is paid out of a fund accumulated from bonuses which 
, become forfeited through noncompliance with the regulations or 
through leaving the company's employ. 

Employees who have taken advantage of the stock subscription 
! plan may also, on being selected by the executive committee, share 
I in the distribution of a certain sum set aside as a "participation 
(so-called profit-sharing) fund," out of the earnings for the cur- 
I rent fiscal year. As a matter of actual practice, participation in 
i this fund, based upon amount of salary and subscription of spe- 
| cific employees, is awarded to every one of those who subscribe for 
stock under the plan. The exact basis of apportionment of the fund 
is not made known. In the past, in instances of lower paid subscrib- 
ers — those earning $1,300 — the participation amounted to 3 per cent 
of annual earnings or a bonus equivalent to $39 on a total stock 
subscription of $120; viz, two shares at $60 each. The so-called 
participation amounts have been correspondingly larger in the cases 
of the higher paid employees, the governing principle of distribution 
apparently being that the higher the salary and the greater the 
importance of the subscribing employee the larger his proportionate 
share in the fund. 



144 



BULLETIN OF THE BUKEAU OF LABOK STATISTICS. 



When the salary of the subscribing employee is less than $5,000 
a year, his share is paid to him in cash ; officers or employees receiv- 
ing more than $5,000 a year receive about 60 per cent in cash and the 
remainder in nonassignable, conditional " certificates of interest" 
in the common stock on the basis of $60 per share, on which full 
dividends are paid. Such a participant remaining in the employ of 
the company for five years, until April 1, 1919, and having rendered 
"faithful and satisfactory service,'' may exchange his " certificate 
of interest" for ordinary share certificates. 

The following facts indicate the working of this plan for the period 
of 1912 to 1915, inclusive. 

Out of a total of about 55,000 employed only 2,500, or approximately 
4.5 per cent, were eligible to subscribe for stock under the terms 
specified in the plan. On the average during the first four years of 
the operation of the plan, slightly over one-half of the eligibles took 
advantage of the offer of the company, thus making the proportion 
of actual beneficiaries under the plan to the total employed about 
2.2 per cent. A total of 4,923 employees subscribed for 27,668 
shares of stock. The subscriptions for three shares or less were 
44.4 per cent of all subscriptions in 1912, 74.2 per cent in 1913, 
73.7 per cent in 1914, and 60.4 per cent in 1915. Only 910, or 3.3 
per cent, of all the shares subscribed for were subsequently canceled. 
During the year 1914, 68 subscribing employees canceled subscrip- 
tions amounting to 285 shares, giving the following reasons for their 
cancellations: (1) Leaving employment of the company, 30; (2) 
inability to continue the making of the stipulated payments, 18; 
(3) discharge, 17. The other three cancellations were due to death 
of the employees. 

The following table shows the amounts paid out, during the first 
four years of the operation of the plan, of the special fund distributable 
immediately upon subscription and in special bonuses for the reten- 
tion of stock. 

Table 65.— NUMBER OF BENEFICIARIES AND AMOUNTS DISTRIBUTED FROM SPECIAL 
FUND AND AS BONUSES FOR RETENTION OF STOCK. 





Special fund. 


Special bonuses for 
retention of stock. 


Year. 


Number 
of bene- 
ficiaries. 


Amount. 


Number 
of bene- 
ficiaries. 


Amount. 


1912 


1,090 
1,201 
1,28.5 
1, 347 


$172,915 
140,041 
1.52, 877 
156, 333 


1,078 
2, 203 
3,420 
4,710 


$24, 645 


1913 


40, 218 
57,954 


1914. . . 


1913 


80, 274 






Total 




622, 166 




203, 091 












(PROFIT SHARING IN THE UNITED STATES. 145 

Over $200,000 was paid out by the company as special bonuses 
or the retention of the subscribed-for stock, at the rate of S3 per 
share per year, as per section 8a of the plan reproduced below. 

The special participation fund during the four-year period amounted 
to $622,166, of which amount $138,590 was paid in so-called certifi- 
cates of interest to employees with an earning capacity of over $5,000 
per year. Inasmuch as the latter amount constituted only 40 per 
cent of the aggregate amount paid out to this class of employees, 
the total amount paid out to them was $346,475, or 55.7 per cent 
of the entire fund; that is, over one-half of the total amount distributed 
was apportioned to employees with an earning capacity of over 
$5,000 per year. 

The text of this plan, as addressed by the company to its officers 
and employees in a circular dated April 20, 1914, follows: 

The company offers to officers and employees whose wages or salaries are at the rate 
of $1,300 per annum or over the opportunity to subscribe for shares of its common 
stock heretofore issued and now held by and in the treasury of the company at 
the price of $60 per share, subject to the following conditions: 

First. All subscriptions shall be for the value of one or more shares of common 
stock at the price of $60 per share and upon the express condition that there may be 
allotted to the subscriber all or any part of his subscription as the executive committee 
may determine. 

Second. The maximum amount which may be subscribed for hereunder by such 
officers and employees respectively will be governed by varying percentages of their 
respective salaries or wages, which percentages will be determined in each case by 
the executive committee, it keeping in mind the salary and position of the individual; 
and, as respects — — ■ — ■ of ; — ■ such maximum amount is ( ) shares. 

No officer or employee of any class is obliged to subscribe for any or for the full 
amount of stock which he may be thus privileged to subscribe for, but if he so elects 
he may subscribe for a lesser amount. 

Third. Payment on the subscriptions shall be made in monthly installments, to be 
deducted from the salary or wages of the subscriber in such amounts as he may desire, 
subject to the provision that the minimum amount of a monthly installment shall be 
$6 per share. The subscriber may anticipate such payment to such extent as he may 
desire, but any amount so paid in anticipation shall be in even dollars. Interest at 
5 per cent per annum will be charged by the company on all amounts unpaid on the 
stock. 

Fourth. From the date on which payments begin and during the continuation of 
such payments all dividends paid on the stock will be credited to the subscription 
account of the subscriber until the stock is fully paid for and issued to him, after which 
dividends will be paid in the same manner as to other stockholders. 

Fifth. In case a subscriber shall cancel his subscription before Ins stock shall have 
been fully paid'for there will be returned to him the exact amount of his payments 
made on account, with interest at 5 per cent per annum on the same from time of 
payment, no credit being given him for dividends or for the special allowance referred 
to in section sixth hereof, and no interest being charged on deferred payments, and 
thereupon his subscription and all interest in the stock to which the same relates 
shall cease and determine. Whenever such payments shall have been discontinued 
without the consent of the company for the period of three months, his account will 
be closed forthwith and his interest in the stock shall cease and his payments on 
account will be returned to him as above stated. 
56831°— Bull. 208—17 10 



146 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

No subscriber can cancel his subscription unless he cancels all of it- 
Sixth. As soon as the stock shall have been fully paid for, and not before, it will be 
issued in the name of the subscriber. The subscriber may tljen sell his certificate 
whenever he chooses, but as an inducement for liim to keep it and to remain continu- 
ously in the employ of the company or of one or another of its subsidiary companies, 
the following offer is made, viz: 

If he does not sell or part with any part of the said stock but shall keep it and on 
the 1st of April, 1915, and the 1st of April for four consecutive years thereafter shall 
exhibit the certificate to an official designated by this company and obtain from him 
a certificate to the effect that he has been continuously in the employ of the company 
or of one or another of its subsidiary companies during the whole preceding year and 
has shown a proper interest in its welfare and progress, he will for each of such five 
years receive from the company a cash payment at the rate of $3 a share for each 
said share of said stock. 

Seventh. If the subscriber shall retain his said certificate and remain continuously 
in the sendee of the company or of one or more of its subsidiary companies for said 
five years, the company intends that he shall then receive a still further compen- 
sation, which can not now be ascertained, but which it is intended will be derived 
from the following sources, viz: 

Subscribers for stock under this offer whose subscriptions are canceled before being 
paid in full will forfeit and will not receive the special allowance of $3 per share 
referred to in section sixth hereof. Nor will such special allowance be paid for such 
of the five years as remain after forfeiture to subscribers whose certificates may be 
transferred from their names at any time during the five years, whether intentionally 
or otherwise; nor to subscribers who after receiving their certificates do not remain 
continuously in the sendee as provided in said section sixth. The company will, 
however, pay into a special fund at the end of each remaining year of said five years 
the said $3 allowances forfeited by subscribers as aforesaid. This latter fund shall 
be credited with 5 per cent annual interest, and at the end of the five years' period 
the total amount thus accumulated will be divided into as many equal parts as shall 
be equal to the number of shares of said common stock issued as aforesaid to and then 
remaining in the hands of subscribers who shall have so continued in such employ 
for the whole of said five years. The company will then by its own final determination 
award to each then remaining subscriber whom it shall find deserving thereof as many 
parts of such accumulated fund as he shall be entitled to on the basis of the number 
of said shares then held by him under this plan as compared with said total number. 
Eighth. In case a subscriber dies or becomes permanently disabled while faithfully 
serving the company or one of its subsidiary companies during such five years' period 
payments will be made to his estate or to him as follows: 

(a) If his subscription is fully paid and he has received and not disposed of his 
certificate, the company will pay, as above stated in section sixth a sum equal to 
$3 per snare for each of the five years not then expired, and also a pro rata amount of 
the special fund mentioned in section seventh, arising from the said forfeitures which 
may have accrued at the time of his death or disablement.* 

(b) If his subscription has not been paid in full, the company will pay, as stated, 
the money theretofore paid in by him on account, together with the dividends paid 
on the stock subscribed for, the special compensation for the entire five years' 
period and a pro rata share of the amount of the special fund mentioned in paragraph 
(a) preceding, less interest at 5 per cent per annum on unpaid amounts. 

(c) If at the time of decease or permanent disablement the subscription has been 
fully paid but certificate not yet delivered, the company will deliver the certificate 
as first stated above, together with the additional payments as mentioned in para- 
graph (a) preceding. 

Ninth. A subscriber may designate in his subscription the person to whom in the 
event of his death he desires the company to deliver all amounts or stock in connec- 



PROFIT SHARING IN THE UNITED STATES. 147 

tion with his subscription which would otherwise be deliverable to his estate. When 
such designation has been made and shall not have been changed, the company, upon 
satisfactory proof of death under the conditions of the subscription, will deliver to 
the person designated, if then living, all amounts of stock in connection with the 
subscription which would otherwise be deliverable to the estate of the subscriber. 
When such designation has been made the subscriber's estate shall have no claim to 
any such amounts or stock unless the person designated or Ms substitute or substi- 
tutes should die before the subscriber, and in that event delivery will be made to 
the subscriber's estate. By written notice delivered to the treasurer of the company 
by which he is employed a subscriber may change the person designated. 

Tenth. Subscribing officers and employees whose employment has been or may be 
suspended by reason of the temporary closing of the company's plants and who shall 
continue ready and willing when required to resume their service will not be deprived 
of the special cash payment of $3 per share per year during such suspension. During 
such suspension monthly payments will not be required, though if so desired by the 
officer or employee they may then be made. 

In case of the death during such suspension of any such officer or employee his 
estate or his designee as above will be entitled to the same benefits accruing to his 
subscription as if he had died while under employment. 

Failure to present the original certificate, as provided, or the withdrawal of a partly 
paid subscription or the failure to resume employment when requested will constitute 
and will be deemed conclusive evidence of the termination of his employment by 
such officer or employee and a relinquishment of all benefits referred to above. 

Eleventh. All subscriptions shall be upon the express understanding and con- 
dition that the decision of the executive committee of the Co., as said 

committee shall from time to time be constituted, shall at all times be final with 
respect to the construction and meaning hereof and to the rights or interests of the 
subscribers or any question relating to or arising out of the same, and that the vote of a 
majority of the committee shall be as conclusive as the unanimous vote of said 
committee. 

Twelfth. Subscriptions will be received until May 10, 1914, inclusive, and allot- 
ment will be made a few days later. The first deductions will be made from May salary 
or wages. 



The executive committee of the Co. announces that: 

First. There has been set aside a certain sum as a profit-sharing fund for the calendar 
year ending on March 31, 1914, for distribution as soon after May 15, 1914, as shall be 
practicable, among various officers and employees of said company and its subsidiary 
companies to be selected by said committee. In so far as any employee receiving a 
salary less than $5,000 per annum is selected to share in said fund, his share will be 
paid to him as soon as possible in cash. When the salary of the officer or employee thus 
selected shall be at the rate of $5,000 per annum or more, about 60 per cent of his share 
of said fund will be so paid in cash and the remainder, under conditions hereinafter 
stated, in nonassignable, conditional certificates of interest in the common stock 

of the Co. on the basis of $60 per share. If 40 per cent of any such 

allotment is insufficient to so purchase one share of said stock, then said 40 per cent 
shall be paid in cash, and if such 40 per cent shall purchase one share or a multiple 
thereof, then any excess over such purchase price shall be paid in cash. 

The certificates of interest above referred to shall provide, among other things, as 
follows: 

(a) That if such participant shall remain continuously in the service of the com- 
pany or of one or another of its subsidiary companies until April 1, 1919, and shall 
during all of such time have rendered faithful and satisfactory sendee to such company 
or to one or another of its subsidiary companies, the stock called for by his con- 



148 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

ditional certificate will be delivered to him as his property upon surrender of his said 
conditional certificate. 

(b) That he will receive such dividends as are declared on the stock while it is so 
held for his account. 

(c) That if he shall voluntarily quit the service of the company or of a subsidiary com- 
pany (except that such voluntary retirement be made under any general pension 
scheme which may hereafter be adopted), or shall be discharged or removed for cause 
by his employer before April 1, 1919, he shall forfeit all right to the stock and to the 
conditional certificate; and in that case such stock will be held in a fund which at the 
end of the five years above named will be divided pro rata according to their respective 
interests among such officers and employees as shall then be entitled to the delivery 
of the stock called for by the certificates of interest held by them. 

(d) That if before April 1, 1919, he dies, or becomes totally and permanently dis- 
abled while in the employ of the company or of one or more of its subsidiary com- 
panies, the stock will be delivered to his estate (or to him if disabled^, together with 
such pro rata amount of additions, if any, as have accrued up to the time of his death 
or disablement. If a beneficiary has been named in his subscription agreement, 
series 1914, referred to below, and such designation has not been changed, delivery 
will be made to the person so designated, if then living, and the participant's estate 
shall have no claim to such stock or additions. 

Second. All questions relating to the meaning or construction hereof or to the rights 
or interests of any officer or employee in, or growing out of, the stock or fund above 
mentioned or referred to shall be determined by the executive committee of the 

Co., and by it alone; and its decision shall be final and conclusive as to all 

parties; and the fund above referred to is to be created on that condition; and the 
action of a majority of said executive committee shall be as binding and conclusive 
in every case as the unanimous action of the entire committee would be. 

Third. It is understood that the above-mentioned profit-sharing fund will be 
distributed and plan administered with special reference to those whose subscription 
agreement, series 1914, shall have been approved and accepted by the company. 

Plan No. 4. 

In December, 1902, a certain corporation announced to its officers 
and employees that out of its earnings during the year 1902 about 
$2,000,000 would be set aside for the purchase of at least 25,000 
shares of the preferred stock, for the purpose of offering it to all 
employees of the corporation and its subsidiary companies at the 
price of $82.50 per share, the market price at that time being $86.25 
to $89.75. This offer (series 1) was to be as of 1903. 

For the purpose of administering the plan the employees then in 
the service of the corporation were divided into six classes, graded 
according to salary received, each class having been given an op- 
portunity to subscribe for a specified number of shares, based upon 
their annual salary or wages. Thus, employees in class A, receiving 
an annual salary of $20,000 or more, were allowed to subscribe for 
an amount not to exceed 5 per cent of their annual salary; employees 
in class B, with a salary of from $10,000 to $20,000 a year, could 
subscribe for an amount equal to 8 per cent of their salary; class C, 
with annual salaries .ranging from $5,000 to $10,000, could sub- 






PEOFIT SHAKING IX THE UNITED STATES. 149 

scribe for an amount of stock equal to 10 per cent of their salary; 
class D, with salaries from $2,500 to $5,000 a year, to 12 per cent; 
class E, with salaries from $800 to $2,500 a year, to 15 per cent; 
and finally, class F, including all employees earning $800 a year or 
less, were allowed to subscribe for an amount equal to 20 per cent of 
their yearly earnings. 

The latest series — December 24, 1915 — triers for subscription to 
employees the common stock of the corporation at $85 per share. 
The maximum number of shares that an employee may subscribe for 
under this series is determined in accordance with his yearly salary 
or earnings, and varies from 1 share (in the case of employees earn- 
ing $637.50 or less per year) to 19 shares (in the case of those earn- 
ing from $19,658.25 to $31,450 per year). 

Payments are to be made in monthly installments, to be deducted 
from the salary or wages, in such amounts as the subscriber may 
desire, with a fixed minimum amount of $2 per share per month, 
but not to exceed 25 per cent of any one month's salary or wages. 
The stock must be paid for within three years. Dividends on the stock 
are credited to the account of the subscriber from the date on which 
he commences to make payments, and 5 per cent interest is charged 
on unpaid balances. 

An employee forfeits all interest in the stock if he leaves the com- 
pany's service or is three months in arrears with his payments, in 
which cases his payments are returned with 5 per cent interest, less 
dividends or special allowances referred to below. 

When the stock is fully paid for, it is issued in the name of the 
subscriber. He may sell his certificates whenever he chooses, but as 
an inducement to retain it while he remains in the service the cor- 
poration offers a yearly cash bonus of $5 per share for five years, 
beginning with January, 1916, on the condition that the subscriber 
is to produce his stock certificate together with a statement from a 
proper official of the company to the effect that he has been con- 
tinuously in the corporation's service during the preceding year, 
"and has shown a proper interest in its welfare and progress." 

Subscribers who have not fully paid their subscriptions, but who 
otherwise fulfill "all the conditions of continuous and faithful serv- 
ice," are also given this bonus. 

A holder of a stock certificate remaining five years continuously in 
the corporation's service may be awarded, if found "deserving 
thereof," a further pro rata bonus from a fund to be derived from the 
forfeited bonuses of employees (a) canceling subscriptions ; (b) trans- 
ferring certificates, whether intentionally or otherwise; (c) leaving 
the service or failing to resume employment when requested. 



150 



BULLETIN OF THE BUREAU OF LABOB STATISTICS. 



The following is a copy of the full text of the offer of 1915: 



To the officers and employees of the 



Corporation and of its subsidiary companies: 



The corporation again offers the opportunity to subscribe for shares of its common 
stock, not exceeding an aggregate total of 35,000 shares, under the following terms 
and conditions: 

First. All subscriptions shall be made upon the express condition and agreement 
that all questions concerning the said subscriptions, and the allotments and interests 
thereunder, shall be decided by the finance committee in its discretion, and such 
decision shall be final and conclusive upon all parties. 

Second. Subscriptions shall be for one or more shares of common stock at the sub- 
scription price of $85 per share. 

Third. The following table shows the maximum number of shares which may be 
subscribed for by employees whose salaries or wages are within the respective limits 
stated, but employees at their option may subscribe for less than such maximum 
number of shares: 

SUBSCRIPTIONS TO COMMON STOCK. 






Employees receiving 
annual salaries of — 



May subscribe for a 
maximum number of— 



$637.50 or less 1 share. 

$637.51 to $1,416.66 2 shares. 

$1,416.67 to $1,893.33 3 shares. 

$1,983.34 to $3,187.50 4 shares. 

$3,187.51 to $3,895.83 5 shares. 

$3,895.84 to $4,604.16 6 shares. 

$4,604.17 to $6,375.00 7 shares. 

$6,375.01 to $7,225.00 8 shares. 

$7,225.01 to $8,075.00 9 shares. 

$8,075.01 to $8,925.00 10 shares. 



Employees receiving 
annual salaries of — 



May subscribe for a 
maximum number of— 



$8,925.01 to $9,775.00 11 shares. 

$9,775.01 to $13,281.25 12 shares. 

$13,281.26 to $14,343.75 13 shares. 

$14,343.76 to $15,406.25 14 shares. 

$15,406.26 to $16,468.75 15 shares. 

$16,468.76 to $17,531.25 16 shares. 

$17,531.26 to $18,593.75 17 shares. 

$18,593.76 to $19,656.25 18 shares. 

$19,656.26 to $31,450.00 19 shares. 



PAYMENTS FOR STOCK. 

Fourth. Payment of subscriptions shall be in monthly installments, to be deducted 
from the salary or wages of the subscriber. The first deduction will be made from 
February salary or wages. No installment shall be less than $2 per share and shall 
not exceed one-quarter of any one month's salary or wages. Installments exceeding 
the minimum must be in even dollars. Payment for the stock must be completed 
within three years. Interest at 5 per cent per annum will be charged on deferred 
payments. 

DIVIDENDS. 



Fifth. Until payment of the subscription has been completed, any dividends paid 
on the stock subscribed for will be credited to the account of the subscriber as part of 
his payment. After the stock is issued to the subscriber, future dividends will go 
direct to him. 

CANCELLATIONS — REFUND OF INSTALLMENTS. 

Sixth. Subscriptions will be canceled for the following reasons: 

(1) By request of subscriber. 

(2) By (a) voluntarily leaving the service, or (b) being discharged for cause, or (c) 
failing to resume employment when requested. (See sec. 11.) 

(3) By discontinuing payments without the consent of the corporation for three 
consecutive months. 

The cancellation of a subscription forfeits all interest and benefits which the sub- 
scriber would have received if he had continued such subscription . There will then 
be returned to him the full amount of payments made on the subscription so canceled 



PROFIT SHARING IX THE UNITED STATES. 151 

with interest at 5 per cent per annum, no credit being given him for dividends or for 
the special allowance referred to in the third paragraph of section 7, and no interest 
being charged on deferred payments. A subscription may not be canceled in part. 

SPECIAL BENEFITS. 

Seventh. When the stock is fully paid for, it will be issued in the name of the 
subscriber. He may sell his certificate, but as an inducement for him to keep it 
while he remains in the service the following offer is made, viz: 

If he will keep the stock and in January of each year, for five years, commencing 
with January, 1917, will exhibit the certificate to the treasurer of his company, 
together with a statement from a proper official that he has been continuously in the 
employ of the corporation or of one or another of its subsidiary companies during the 
preceding year, and has shown a proper interest in its welfare and progress, he will 
for each of such five years receive a cash payment at the rate of $5 a share for each 
share of common stock. . 

Subscribers who may not have fully paid their subscriptions by January in any year 
will, if their subscriptions are still in force, and they have otherwise fulfilled all the 
conditions of continuous and faithful service as provided, be credited in their subscrip- 
tion accounts with the foregoing special allowance of $5 per share on their subscrip- 
tions for common stock. 

ADDITIONAL COMPENSATION. 

Eighth. If a subscriber keeps his certificate and remains continuously in the service 
for five years, the corporation intends that he shall then receive a still further compen- 
sation, which can not now be ascertained or stated, but which will be derived from 
the following sources, viz: 

The special allowances referred to in section 7, which, after a subscription is fully 
paid, are forfeited by (a) transfer of certificate from name of a subscriber, whether 
intentionally or otherwise; (b) voluntarily leaving the service, or being discharged 
for cause, or failing to resume employment when requested (see sec. 11), will be paid 
by the corporation into a special fund at the end of each year. This fund will be 
credited with interest at 5 per cent per annum and at the end of the five years' period 
the total amount thus accumulated will be divided into as many parts as shall be equal 
to the number of shares of common stock subscribed for hereunder and then remaining 
in the hands of subscribers who shall have continued in such employ for the whole 
five years. The corporation will then by its own final determination in its discre- 
tion award to each subscriber whom it shall find deserving thereof as many parts of 
such accumulated fund as he shall be entitled to on basis of the number of shares then 
held by him under this plan. 

DEATH OR PERMANENT DISABILITY. 

Ninth. If a subscriber dies or is permanently disabled while rendering faithful 
service during such five years' period, payments will be made to his estate or to him 
as follows : 

(a) If his subscription is fully paid and he has received and not disposed of his cer- 
tificate of stock, the corporation will pay a sum equal to $5 per share for each of the five 
years not then expired, and also a pro rata amount of the special fund arising from for- 
feitures, referred to in section 8 preceding, which may have accrued at the time of his 
death or disability. 

(b) If his subscription has not been paid in full, the corporation will pay the money 
theretofore paid in by him on account, together with the dividends paid on the stock 
subscribed for, the special allowance for the entire five years' period, and a pro rata 
share of the amount of the special fund mentioned, less interest at 5 per cent per 
annum on deferred installments. 



152 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

(c) Ii at time of decease or permanent disablement the subscription has been fully 
paid but certificate not yet delivered, the corporation will turn over the certificate, 
as first stated above, together with the additional payments mentioned in paragraph 
(a) preceding. 

PENSIONED EMPLOYEES. 

A pensioner will not be permitted to subscribe, but any subscriber who is subse- 
quently pensioned may continue payments on his subscription, and when fully paid 
he will receive the certificate for the stock subscribed for and the payments referred 
to in paragraph (a) of section 9: Provided, however, That as soon as he shall have fully 
paid his subscription and received his certificate of stock, he will be treated as 
though permanently disabled, and payments will be made to him in accordance with 
provisioDS of paragraph (a), section 9. 

BENEFICIARY. 

Tenth. A subscriber may name in his subscription as beneficiary the person to 
whom in the event of his death he desires the corporation to pay all amounts in con- 
nection with his subscription which would otherwise be payable to his estate. The 
corporation, upon satisfactory proof of death under the conditions of the subscription, 
will pay to such beneficiary all amounts in connection with the subscription which 
would otherwise be payable to the estate of the subscriber. When such beneficiary 
has been named, the subscriber's estate shall have no claim to any such amounts, 
unless the beneficiary should die before the subscriber, and in that event payment 
will be made to the subscriber's estate. By written notice delivered to the treasurer 
of the company by which he is employed, a subscriber may substitute another 
beneficiary. 

SUSPENSION OF EMPLOYMENT. 

Eleventh. Subscribers whose employment has been suspended by reason of the 
temporary closing of a plant, and who shall continue ready and willing when required 
to resume their service, will not be deprived of the special allowance of $5 per share 
per year during such suspension, although they may have accepted employment 
during such suspension. As presumptive evidence of willingness to resume employ-, 
ment, the corporation will accept (1) from the holders of fully paid subscriptions the 
exhibition of the original certificate in January of each year, and (2) from the holders 
of partly paid subscriptions the retention by them of their subscription during the 
preceding year. 

The above period of suspension will not be counted as part of the three years limited 
for the full payment of the subscriptions, and during such suspension monthly pay- 
ments will not be required, though if so desired by the employee they may be 
continued . 

In case of the death during such suspension of any such subscribing and continuing 
employee, his estate or his beneficiary will be entitled to the same benefits accruing 
to his subscription as if he had died while under employment. 

Failure to present the original certificate as provided, or the withdrawal of a partly 
paid subscription, or the failure to resume employment when requested, will consti- 
tute a relinquishment of all benefits referred to in this circular. 

Twelfth. Subscriptions will be received until January 29, 1916, and allotment made 
as soon thereafter as possible. 

The following table shows the number employed and eligible to 
subscribe for stock, the proportion that took advantage of the oppor- 
tunity offered, and the number of shares subscribed for, by years, 
since the inception of the plan in 1903: 



PEGFIT SHARING IN THE UNITED STATES. 



153 



Table 66.— NUMBER EMPLOYED AND ELIGIBLE, PROPORTION SUBSCRIBING, AND 
SHARES SUBSCRIBED FOR, BY YEARS, 1903 TO 1916. 



Year. 



1903 
1904 
1905 
1906 
1907 
1908 
1909 
1910 
1911. 
1912 
1913. 
1914 
1915. 
1916. 



Average 

number 

employed 

and 
eligible 



168, 127 
167, 709 
147,343 
180, 158 
202,457 
210, 180 
165,211 
195, 500 
218, 435 
196, 888 
221, 025 
228, 906 
179,353 
191, 126 



Subscribers. 



Shares subscribed 
for. 



Number. 



26, 339 

9,912 

8,494 

12, 192 

14, 163 

24,562 

19, 123 

17,363 

26,313 

36, 946 

35, 460 

46, 498 

C 1 ) 

24, 939 



Per cent 
of all em- 
ployed 

and 
eligible. 



15.7 

5.9 

5.8 

6.8 

7.0 

11.7 

11.6 

8.9 

12.0 

18.8 

16.4 

20.5 

C 1 ) 
13.0 



Number. 



47, 551 
31,644 
18, 180 
24, 001 
27, 150 
30, 450 
33, 347 
24, 580 
48, 411 
59,502 
60, 344 
90,609 
C 1 ) 
49,741 



Average 
per sub- 
scriber. 



C 1 ) 



1.8 
3.2 
2.1 
2.0 
1.9 
1.2 
1.7 
1.4 
1.8 
1.7 
1.7 
1.9 

2.0 



1 No stock was offered in 1915. 

During the entire existence of the plan, the relative proportion of 
the total employed and eligible that subscribed for stock varied from 
5.8 per cent in 1905, to 20.5 per cent in 1914, the average proportion 
subscribing having been slightly below 12 per cent. The average 
number of shares per subscription varied from 1.4 in 1910, to 3.2 in 
1904, the highest since the plan was put into operation. 

The table following shows for each year the class of stock offered, 
the subscription price, and the range of market quotations for this 
class of stock. 

Table 67.— KIND OF STOCK OFFERED TO EMPLOYEES, SUBSCRIPTION PRICE, AND 
RANGE OF MARKET QUOTATIONS, BY YEARS, 1903 TO 1916. 



Year. 


Class of stock. 


Sub- 
scription 
price 
per 
share. 


Range of market 
quotations. 




Lowest. 


Highest. 


1903 


Preferred 


882. 50 

55.00 

87.50 
100.00 
102. 00 

87.50 
110.00 

50.00 
124. 00 
114. 00 

70.00 
108.00 

65.00 
109.00 

66. 00 
105. 00 

57.00 


$86. 250 

54.625 

91. 125 

105. 000 

104. 000 

87. 500 

112. 250 

51. 1250 

121.250 

116.250 

71.375 

110. 125 

62. 875 

102. 500 
49. 875 

103. 500 
50.500 


$89. 750 


1904 




60. 000 


1905 


Preferred 


95. 750 


1906 


113.250 


1907 


Preferred 


107. 750 


1908 




95. 375 




/Preferred 


115.000 


1909 


(Common 


55. 125 




1910 




125. 375 




/Preferred 


120. 000 


1911 


(Common 


80.000 






/Preferred 


111.500 


1912 


(Common 


69. 875 






/Preferred 


110. 750 


1913 


\Common 


69. 125 






/Preferred 


112.750 


1914 


(Common 


67.250 




19151 






1916 


Common 


85. 00 


2 89. 000 













1 No stock offered in 1915. 



1 During January and February, 1916. 



154 



BULLETIN OF THE BUREAU OF LABOR STATISTICS. 



Annually from 1903 to 1908, inclusive, and in 1910, preferred 
stock only was offered to employees. During the. years 1909 and 
1,911 to 1914, inclusive, common as well as preferred stock was 
offered. No offer was made for 1915. For 1916 an offer of common 
stock at $85 per share was announced. 

On September 30, 1903, in view of the decline then occurring in 
the market value of the preferred stock of the corporation which fact 
might have excited apprehension of possible loss to the employees 
who subscribed for it under the offer of that year, the finance 
committee of the corporation issued to subscribing employees a cir- 
cular letter to the effect that "the corporation will at any time dur- 
ing January and February, 1908, pay to every subscribing officer or 
employee who shall have retained his stock for the full period of five 
years * * * $82.50 per share for the stock, less the rebates and 
benefits he shall have been entitled to under the circular of 1903 
(not including benefits received on account of the difference between 
interest and dividend, which he will in any event retain) provided 
he wishes to sell the stock for that price at that time." 

The table following shows, by classified salary groups, the num- 
ber of employees subscribing for stock during each year from 1903 
to 1912. 



Table 68.— NUMBER OF EMPLOYEES SUBSCRIBING FOR STOCK, CLASSIFIED ACCORD- 
ING TO ANNUAL SALARY, BY YEARS, 1903 TO 1916. 



Year. 



1903. 
1904. 
1905. 
1906. 
1907. 
1908. 
1909. 
1910. 
1911. 
1912. 
1913, 
1914. 
1915 < 
1916, 



Number of subscribers whose salaries were — 



Under 



11, 373 

4,126 

3,531 

5,070 

5,276 

9,098 

6,950 

5,923 

9,198 

15,349 

12, 280 

15, 295 



and 
under 
$2,500 



13,845 

5,094 

4,297 

6,277 

7,915 

14, 302 

11,139 

10, 344 

15, 841 

20, 096 

21, 499 

29, 290 



$2,500 

and 

under 

$5,000 



942 

514 

495 

641 

731 

903 

783 

844 

995 

1,215 

11,681 

1 1, 943 



$5,000 

and 

under 

$10,000 



( 2 ) 
( 2 ) 



179 
135 
132 
156 
192 
203 
196 
201 
223 
234 



$10,000 

and 

under 

$20,000 



( 2 ) 
( 2 ) 



45 
31 
26 
31 
32 
36 
35 
32 
37 
34 



$20,000 
and over, 



( 2 ) 
( 2 ) 



15 
12 
13 
17 
17 
20 
20 
19 
19 
18 



Total 
subscrib- 
ers. 



26, 399 
9,912 
8,494 
12, 192 
14, 163 
24, 562 
19, 123 
17, 363 
26,313 
36.946 
35, 460 
46, 498 



7,231 



16, 152 



1 1, 556 



(2) 



( 2 ) 



( 2 ) 



24,939 



1 Including those receiving $2,500 and over. 

2 Included in the group $2,500 and under $5,000. 

3 No stock offered. 



The following table shows the per cent of the subscribers who 
received each classified amount of annual salary during each of the 
years from 1903 to 1916. 



PROFIT SHARING IX THE UNITED STATES. 



155 



Table 69.— PER CENT OF TOTAL SUBSCRIBERS FOR STOCK RECEIVING EACH CLASSI- 
FIED AMOUNT OF ANNUAL SALARY, BY YEARS, 1903 TO 1912. 







Per cent of total subscribers whose salaries were — 




Year. 


Under 

$800 


$800 

and 

under 

$2,500 


$2,500 

and 

under 

$5,000 


$5,000 

and 

under 

$10,000 


$10,000 

and 
under 
$20,000 


$20,000 
and 
over. 


Totau 


1903 


43.1 
41.6 
41.6 
41.6 
37.3 
37.0 
36.3 
34.1 
35.0 
41.5 
34.5 
33.0 


52.4 
51.4 
50.6 
51.5 
55. 9 
58.2 
58.3 
59.6 
60.2 
54.4 
60.6 
62.8 


3.6 
5.2 
5.8 
5.3 
5.2 
3.7 
4.1 
4.9 
3.8 
3.3 
14.7 
14.3 


0.7 

1.4 

1.6 

1.3 

1.4 

.8 

1.0 

1.2 

.8 

.6 

( 2 ) 

( 2 ) 


0.2 
.3 
.3 
.3 
.2 
.1 
.2 
.2 
.1 
.1 

( 2 ) 

( 2 ) 


0.10 
.10 
.20 
.10 
.10 
.OS 
.10 
.10 
.07 
.05 

( 2 ) 

( 2 ) 


100.0 


1904 


100.0 


1905 . 


100.0 


1906 


100.0 


1907 


100.0 


1908 


100.0 


1909 


100.0 


1910 


100.0 


1911 


100.0 


1912 


100.0 


1913 


100.0 


1914 


100.0 


1915 3 




1916... 


28.9 


64.9 


16.2 


( 2 ) 


C 2 ) 


( 2 ) 


100.0 







i Including those receiving $2,50U and over. 

2 Included in the group $2,500 and under $5,000. 

3 No stock offered. 



The table following shows for each year since 1903 the number of 
shares of stock allotted to employees in each specified salary group. 

Table 70.— NUMBER OF SHARES OF STOCK ALLOTTED TO EMPLOYEES IN EACH CLASSI- 
FIED SALARY GROUP, BY YEARS, 1903 TO 1916. 





Class of stock. 


Number of shares allotted to subscribers whose annual salaries were — 


Year. 


Under 

$800 


$800 

and 

under 

$2,500 


$2,500 

and 

under 

$5,000 


$5,000 

and 

under 

$10,000 


$10,000 

and 

under 

$20,000 


$20,000 

and 

over. 


Total. 


1903 


Preferred 


12,844 
8,701 
4,512 
5,610 
6,058 
9,369 
5,264 
2, 574 
5,923 
5,783 
5,008 
7, 154 

10, 079 

} 13.661 
| 18.465 


28,203 
15, 709 

9,921 
13,641 
16,051 
17,392 
11,161 

7,377 
14,122 
12,012 
17, 574 
17, 805 
17.450 

36,557 
59. 310 


4,688 
4,045 
2,228 
2,884 
3,026 
2,296 
783 
3,444 
2,715 
1,065 
3,826 
3,667 
2,144 

19,284 

i 12, 834 


1,232 
1,982 

890 
1,170 
1,312 

922 

474 
1,256 
1,196 

316 
1,798 
1,443 

667 

( 2 ) 
C 2 ) 


396 
735 

372 
352 
365 
251 
154 
358 
323 
104 
459 
339 
166 

o 

C 2 ) 


188 
472 
257 
344 
338 
220 
124 
376 
301 
50 
416 
327 
113 

( 2 ) 
C 2 ) 


47, 551 


1904 


Preferred 


31,644 


1905 


Preferred 


18, ISO 


1906 


Preferred 


24,001 


1907 


Preferred 


27, 150 


1908 


Preferred 

/Preferred 


30,450 
17,960 


1909 


\Common. 


15, 387 


1910 


Preferred 


21,580 




/Preferred 


19,330 


1911 


\Common 


29,081 




/Common 


30, 735 


1912 


\ Preferred 


30, 019 




/Preferred 


59, 502 


1913 


\Common 




( Common 


90,609 


1914 


\ Preferred 








1916 


Common 


8,872 


31,635 


19,234 


( 2 ) 


( 2 ) 


( 2 ) 


49,741 






- 



i Including shares of all receiving $2,500 and over. 
2 Included in salary group $2,500 and under $5,000. 
s No stock offered. 



The next table shows what proportion of the total shares of stock 
allotted to employees was subscribed for by those in each salary 
group. 



156 



BULLETIN OF THE BUREAU OF LABOR STATISTICS. 



Table 71.— PER CENT OF TOTAL SHARES OF STOCK ALLOTTED TO EMPLOYEES IN 
EACH CLASSIFIED SALARY GROUP, BY YEARS, 1903 TO 1916. 





Class of stock. 


Per cent of total shares allotted to subscribers whose annual 
salaries were— 




Year. 


Under 

$800 


$800 and 
under 
$2,500 


$2,500 

and 

under 

$5,000 


$5,000 

and 

under 

$10,000 


$10,000 

and 

under 

$20,000 


$20,000 
and 
over. 


Total. 


1903 


Preferred 


27.0 
27.5 
24.8 
23.4 
22.3 
30.8 
29.3 
16.7 
24.0 
29.9 
17.2 
23.3 
32.9 

} 23.0 
} 20.4 


59.3 
49.6 
54.6 
56.8 
59.1 
57.1 
62.1 
47.^ 
57.5 
62.1 
60.5 
57.9 
57.0 

61.4 
65.5 


9.9 
12.8 
12.3 
12.0 
11.1 

7.5 

4.4 
22.4 
11.0 

5. 5 
13.2 
11.9 

7.0 

i 15.6 
i 11.2 


2.6 
6.3 
4.9 
4.9 
4.8 
3.0 
2.6 
8.2 
4.9 
1.6 
6.2 
4.7 
2.2 

( 2 ) 
( 2 ) 


0.8 
2.3 
2.0 
1.5 
1.3 

.8 

.9 
2.3 
1.3 

.5 
1.6 
1.1 

. 5 

( 2 ) 
( 2 ) 


0.1 
1.5 
1.4 
1.4 
1.2 

.7 

.7 
2.4 
1.2 

.3 
1.4 
1.1 

.4 

( 2 ) 
( 2 ) 


100.0 


1904 

1905 


Preferred 

Preferred 


100.0 
100.0 


1906 


Preferred 


100.0 


1907 *... 


Preferred 


100.0 


1908 


Preferred 


100.0 




f Preferred 


100.0 


1909 


(Common 


100.0 


1910 


Preferred.. 


100.0 




/Preferred 


100.0 


1911 

1912 


\Common 

( Common 


100.0 
100.0 


\ Preferred 


100.0 


1913 


/Preferred 


100.0 


\Common 


1914 


/Common 


100.0 


\ Preferred 


1915 3 






1916 


Common 


17.8 


63.6 


i 18.6 


( 2 ) 


( 2 ) 


( 2 ) 


100.0 









1 Including shares of all receiving $2,500 and over. 

2 Included in salary group $2,500 and under $5,000. 

3 No stock offered. 

The extent to which the lower-paid employees, presumably those 
engaged in the processes of manufacturing, have benefited by this 
plan may be inferred from the figures shown in Tables 70 and 71. 
Since the inception of the plan, in 1903, the relative proportions of 
the total numbers of shares allotted annually to employees earning 
less than $800 per year varied from about one-third (32.9 percent) 
of the preferred-stock allotment of 1912 to less than one-fifth (16.7 
per cent) of the common-stock allotment of 1909. 

The tables show that the bulk of the allotted stock went to em- 
ployees with an earning capacity of $800 and under $2,500 per year, 
this group, embracing presumably the better grades of the manu- 
facturing, clerical, and supervisory forces of the organization, hav- 
ing been allotted annually from one-half to three-fifths of the total 
number of shares. 

The same tables show that whenever common and preferred stock 
was offered, employees earning less than $800 per year preferred the 
latter to the former, while the opposite seems to have been true of 
the better-paid employees, the latter preferring usually the common 
stock of the company. 

During the years 1903 to 1916 the proportions that were allotted 
to employees earning between $2,500 and $5,000 per year varied 
from 22.4 per cent of the common-stock allotment of 1909 to 4.4 per 
cent of the preferred-stock allotment of the same year. 






PROFIT SHARING IN THE UNITED STATES. 157J 

Benefits of the Plan to Subscribing Employees. 

The various bonuses paid by this company constituted a consider- 
able inducement to subscribe for stock. Thus, a subscriber under 
the series of 1903 who remained in the service of the company until 
the end of the series — 1908 — received per share purchased in 1903 at 
$82.50 the following bonuses: 

(1) Dividends (5 years at $7) $35. 00 

(2) Annual bonuses (5 years at $5) 25. 00 

(3) Pro rata share in special fund at end of series 1 G2. 50 



Total 122. 50 

Assuming a charge of $5 per share as interest on the deferred pay- 
ments, the net gain to the subscriber of the series of 1903 was $117.50, 
an average of 28.5 per cent per year on the original investment 
of $82.50. 

In 1910 the pro rata amount per share in the special fund of series 
of 1905 was $16.80, the aggregate net gain per share (including divi- 
dends and bonus) having been $71.80; allowing a charge of $5 per 
share as interest on deferred payments, the net gain per share in the 
series of 1905 amounted to 16.4 per cent per annum on the original 
investment of $87.50. A subscriber of the series of 1907 (termin- 
ating in 1912) received 15.2 psr cent per annum on his original 
investment of $102. 

Computed as a percentage of the employees' earnings during the 
period covered by a series — 5 years — the total gains in the case, for 
instance, of an employee earning $800 per year, amounted to : Series 
terminating in 1908, 6.1 per cent; in 1910, 3.8 per cent; in 1912, 3.9 
per cent. Percentage gains on the earnings of subscribing em- 
ployees approximating closely that of the latter series resulted from 
the operation of the plan in the series that terminated in 1913, 1914, 
and 1915. . 

CASH BONUS PLANS BASED UPON LENGTH OF SERVICE. 

GENERAL NATURE OF PLANS. 

The term " profit sharing" has frequently been used to denote plans 
involving more or less systematic annual distributions of cash bonuses 
in the form of a fixed percentage on earnings, varying with the length 
of continuous service of individual employees. The theory under- 
lying the majority of such plans is the recognition by employers of 
the fact that the longer a person remains in the continuous service 
of the firm the greater is the value of his services. 

1 This unusually large amount was caused by the large number of cancellations during series, due mostly 
to: («) Large number of employees dismissed in 1904 on account of the business depression in the 
industry; (6) reduction in wages made in 1904 that made it difficult for many employees to continue pay- 
ments. 






158 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

As in most of the plans described in the preceding sections of this 
report, the extra payments made to employees under these plans bear 
no direct relation to individual efficiency, and are purely voluntary 
on the part of the employer, the latter reserving to himself the right 
to discontinue them at will and without notice. The bonuses paid 
are in the majority of instances fixed in advance and do not vary 
with the profits of the business, employers considering the extra ex- 
pense involved in the payment of these bonuses a part of their labor 
cost. 

In the great majority of the plans under discussion the only pre- 
requisite for participation is a minimum length of continuous service, 
varying from three months (the lowest), in a very few instances, to 
five years (the highest) , the average being about one year. The longer 
the service the larger the bonus percentage paid. In every instance, 
the bonuses under these plans are paid in cash and forfeited amounts 
revert to the company. 

The text of a plan as prepared by a certain company and promul- 
gated among its shop employees in the form of a circular follows. 
It embodies all of the features common to such plans: 

The company recognizes that the longer a person remains in the continuous service 
of the company, the greater is the value of his services to it, and in view of this fact, 
and in order that he may himself benefit by such continued service, we have decided 
upon a system of extra payments to be made depending upon the length of time which 
the employee remains with us. These extra payments will date from May 1, 1915, 
and will apply to all employees on the shop roll in the service of the company on that 
date, and to those who may thereafter be so employed, as follows: 

To each employee who shall have remained continuously in the company's service 
for a period of three months, there will at the expiration of such period be paid an 
amount equal to 3 per cent of his total earnings during the said three months' period. 

To each employee who shall have remained continuously in the company's service 
for a period of six months, there will be paid an amount, at the expiration of such 
period, that, after deducting the amount already paid for the three months' period, 
will equal 6 per cent of his total earnings during the six months' period. 

To each employee who shall have remained continuously in the company's service 
for a period of nine months, there will be paid to him an amount, at the expiration of 
such period, that, after deducting the amount already paid for the three and six 
months' periods, will equal 9 per cent of his total earnings during the nine months' 
period. 

To each employee who shall have remained continuously in the company's service 
for a period of one year, there will be paid to him an amount that, after deducting 
the amount already paid for the three, six, and nine months' periods, will equal 
12 per cent of his total annual earnings. 

These extra payments will be paid each year during the employee's continuous 
service with the company, until further notice, on the above basis, except that at the 
end of the second year of continuous service on the part of the employee, a further 
bonus will be paid in such, an amount as to make the total for the year equal to 15 
per cent of the employee's earnings during that year. 






PROFIT SHARING IN THE UNITED STATES. 



159 



Leaving the company's employ or being absent from duty without permission, 
or without a good and sufficient reason, will operate to cancel the obligations of the 
company herein set forth toward the employee. Absence on account of sickness or 
other unavoidable causes will not operate to deprive the employee of the benefits of 
this plan. 

We wish to point out that these percentages are calculated on the total earnings 
of the employee during the periods indicated and are not based upon the hourly rate. 

The company reserves the right to modify or terminate this arrangement upon 
due notice being given, but such notice shall not affect any employee who has been 
employed prior to such notice until his two years of service shall have expired. 

Firms having such plans in operation are very numerous. In 
view, however, of the fact that these plans may not properly be 
classified as involving the principle of profit sharing — the main 
subject of this report — no effort was made to compile a complete list 
of such plans in operation in the United States at the present time. 

ANALYSIS OF WORKING OF A SELECTED GROUP OF CASH BONUS PLANS. 

For the purpose of comparing the results of the operation of these 
plans with those of plans involving the application of the principle of 
profit sharing, namely, extent of application, benefits to employees, 
cost to employer, etc., the results of the working of a representa- 
tive group of such plans are herewith presented. 

Extent of Participation. 

The extent to which employees in a selected group of 22 of these 
establishments participated is shown in the following table : 

Table 72.— CLASSIFIED PERCENTAGE OF TOTAL EMPLOYEES PARTICIPATING DUR- 
ING ONE REPRESENTATIVE YEAR IN 22 ESTABLISHMENTS. 



Classified percentage of total em- 
ployees participating. 


Number 
of estab- 
lish- 
ments. 


5 and under 10 


1 
2 
5 

5 
9 


20 and under 40 


40 and under 60 


60 and under 80 


80 and over 


Total 


22 





In over four-fifths of the establishments in this group the propor- 
tion of the total employees that received cash bonuses at the end of 
one representative year was 40 per cent or more. In almost two- 
thirds of the establishments 60 or more per cent of all the employees 
participated. 



160 



BULLETIN OF THE BUREAU OF LABOR STATISTICS. 



Benefit Accruing to Employees. 

Below is given a summary table showing the benefits that accrued 
to the employees under these plans during one representative year: 

Table 73 NUMBER OF ESTABLISHMENTS GRANTING EACH CLASSIFIED PER CENT 

OF WAGES AS BONUS TO EMPLOYEES DURING ONE REPRESENTATIVE YEAR. 



Classified percentage of wages 
granted as bonus. 


Number 
of estab- 
lish- 
ments. 


2 and under 4 


2 
2 
4 
5 
7 
1 
1 


4 and under 6 


6 and under 8 


8 and under 10 


10 and under 15 


15 and under 20 


20 and under 30 


Total 


22 





I 



Only one establishment paid a bonus exceeding 20 per cent of the 
regular earnings of its employees. In 9 of the establishments the 
bonus percentage paid was 10 per cent or more. In over four-fifths 
of all the percentage paid on the earnings of the participating em- 
ployees was more than six. 

Cost of Plans to Employees. 

The cost to the employers of operating these plans in terms of per- 
centage of the total pay roll is shown below: 

Table 74.— COST OF BONUS PLANS TO 22 EMPLOYERS IN PER CENT OF TOTAL PAY 

ROLLS FOR ONE YEAR. 



Classified per cent of pay rolls. 



Under 1 

2 and under 4.. 
4 and under 6.. 
6 and under 8.. 
8 and under 10. 
10 and under 15 

Total 



Number 
of estab- 
lish- 
ments. 



22 



In four instances the cost of the plans to the employer amounted to 
10 per cent or more of total pay roll. In over one-half of the estab- 
lishments it was less than 6 per cent. 



PROFIT SHARING IN THE UNITED STATES. 



161 



Occupations of Participants. 

The number and per cent of employees that received bonuses dur- 
ing the year under discussion are shown below in occupation groups: 

Table 75.— NUMBER AND PER CENT OF PARTICIPATING EMPLOYEES IN EACH OCCU- 
PATION GROUP. 



Occupation group. 


Participating em- 
ployees. 


Number. 


Per cent. 


Clerical 


415 
770 

11,876 


3.2 
5.9 

90.9 


Manufacturing 
and all others . . 

Total 


13,061 


100.0 



- Over four-fifths of the beneficiaries under these plans were engaged 

' in occupations other than executive or clerical; that is, were engaged 

in a mechanical or manual way in the actual processes of manufac- 



turing or distribution. 

MISCELLANEOUS PLANS. 

A SO-CALLED COOPERATIVE WAGE SYSTEM. 

In August, 1911, the management of a certain company put into 
effect a so-called cooperative wage plan as representing its policy in 
determining the rates of wages of its trainmen — motormen and con- 
ductors. Under this plan approximately 22 per cent of the gross 
passenger receipts of the company is set aside in a separate fund for 
use in payment of wages, pensions, and deach benefits to the train- 
men engaged in the passenger service. 

Many increases in the rates of wages of motormen and conductors 
have been made since the plan was put into operation. The follow- 
ing table shows the scale of hourly rates of wages adopted at each 
specified date, attributable to the operation of the plan. 

Table 76.— CHANGES IN SCALE OF WAGES SINCE 1911. 



Scale made effective 



June 5, 1911 (in settlement of 1910 strike) 

July 1, 1911 

Jan. 1, 1912 

July 1, 1912 

Jan. 1, 1913 

May 1, 1913 

July 1 , 1913 

Sept. 1, 1913 



Begin- 
ner's rate 
(per 
hour). 



Cents. 
22 
22 
22 
22 
22* 
23 
24 
25 



Rate per hour after a service of — 



1 year. 



Cents. 
23 
23 
23 
23 

m 

24 
25 

26 



2 years. 3 years. 4 years 



Cents. 
23 
23* 
23* 
23* 
24 
25 
26 
27 



Cents. 
23 
23* 
24 
24 
25 
26 
27 
28 



Cents. 
23 
23* 
24 
24* 
26 
27 
28 
29 



5 years. 



Cents. 
23 
23* 
24 
25 
27 
28 
29 
30 



56831°— Bull. 208—17- 



11 



162 



BULLETIN OF THE BUREAU OF LABOR STATISTICS. 



A PLAN BASED ON PRICE OF PRODUCT. 

A company engaged in the mining of copper has had in operation 
since 1914 a method for the determination of wages for its mining 
force which is sometimes improperly termed profit sharing. Under 
this plan the wage paid per day depends wholly upon the price per 
pound that the extracted copper is sold for, this price being " the 
average price for each month" as reported by the Mining and 
Engineering Journal. 

The plan establishes a minimum wage of S3. 50 per day, based 
upon a price of 13.99 cents or less per pound for copper. With 
increases in the price of copper corresponding increases in the wage 
per day are automatically effected. The following table shows this 
sliding scale of wages and the minimum and maximum per day that 
may be reached. 1 

Table 77.— SCALE OF WAGES. 



Price of copper per pound 
(cents). 


Wage 
per day. 


Price of copper per pound 
(cents). 


Wage 
per day. 

$4.40 
4.50 
4.65 
4.75 
4.90 

2 5.00 


13.99 and under 


i $3. 50 
3.65 
3.75 
3.90 
4.00 
4.15 
4.25 


20.00 to 20.99 


14.00 to 14.99 


21.00 to 21.99 


15.00 to 15.99 


22.00to22.99 


16.00 to 16.99 


23.00to 23.99 


17.00 to 17.99 


24.00 to 24.99 


18.00 to 18.99 


25.00 and over 


19.00to 19.99 







1 Minimum. 



2 Maximum. 



Thus it may be seen that, depending upon the price of copper, the 
plan establishes a minimum of $3.50 and a maximum of $5 per day. 

Under this plan, at the end of 1915, when the price of copper 
mounted to 27 cents per pound, the wage per day of the miners w T as 
automatically put at $5. 

BONUS PLAN OF SUGAR PLANTATIONS OF HAWAII. 

A plan providing for a sliding scale of bonuses, has been in opera- 
tion in many sugar plantations on the Hawaiian Islands since Janu- 
ary 1, 1912. In April, 1916, it was decided by the planters of the 
territory that in view of the unusual prosperity brought about by 
the continuance of the war in Europe and the consequent high 
prices of sugar, that the laborers should participate more largely in 
the prosperity of the industry. The planters therefore adopted a 
more liberal bonus system than that of 1912, the essential features 
of which are shown below. 

1 A method of wage payment strikingly similar to the one of this company is provided for in many of 
the collective agreements between the employers and the Amalgamated Association of Iron, Steel, and 
Tin Workers. 



PROFIT SHARING IN THE UNITED STATES. 



163 



Sliding Scale Bonus. 

(Amended as of Apr. 1, 1916.) 

FIRST. AMENDMENTS TO SLIDING SCALE BONUS. 

The sliding scale bonus plan adopted by the plantations January 1, 1912, shall be 
amended to read and be as hereinafter set forth. 

The current bonus period from November 1, 1915, to October 31, 1916, will be 
divided into two parts. The first will include the five months to April 1, 1916, for 
which the bonus will be settled October 31, 1916, according to the schedule heretofore 
existing. For the remaining seven months from April 1, 1916, to October 31, 1916, 
the bonus will be based upon the schedule hereinafter set forth. Thereafter the bonus 
period will be for the 12 months to end October 31 in each year until further notice. 

SECOND. DETERMINATION AND BASIS OP BONUS. 

(A) The bonus shall be based on the average of the daily New York market price 
for 96° centrifugal raw sugar, duty paid, for the year, as reported to the Hawaiian 
Sugar Planters' Association by , of New York. 

(B) If the New York market price for 96° raw sugar averages for the year 3.55 cents 
per pound — $71 per ton- — laborers shall receive a bonus at the rate of H per cent of 
their wages or earnings as hereinafter set forth, and for every dollar per ton increase 
over said $71 per ton the bonus will be increased 1^ per cent, as follows: 



Market 


Market 




Market 


Market 




price per 


price per 


Bonus. 


price per 


price per 


Bonus. 


pound. 


ton. 




pound. 


ton. 




Cents. 


Dollars. 


Per cent. 


Cents. 


Dollars. 


Per cent. 


3.55 


71 


1.5 


4.80 


96 


39.0 


3.60 


72 


3.0 


4.85 


97 


40.5 


3.65 


73 


4.5 


4.90 


98 


42.0 


3.70 


74 


6.0 


4.95 


99 


43.5 


3. 75 


75 


7.5 


5.00 


100 


45.0 


3.80 


76 


9.0 


5.05 


101 


46.5 


3.85 


77 


10.5 


5.10 


102 


48.0 


3.90 


78 


12.0 


5.15 


103 


49.5 


3.95 


79 


13.5 


5.20 


104 


51.0 


4.00 


80 


15.0 


5.25 


105 


52.5 


4.05 


81 


16.5 


5.30 


106 


54.0 


4.10 


82 


18.0 


5.35 


107 


55. 5 


4.15 


83 


19.5 


5.40 


108 


57.0 


4.20 


84 


21.0 


5.45 


109 


58.5 


4.25 


85' 


22.5 


5.50 


110 


60.0 


4.30 


86 


24.0 


5.55 


111 


61.5 


4.35 


87 


25.5 


5.60 


112 


63.0 


4.40 


88- 


27.0 


5.65 


113 


64.5 


4.45 


89 


28.5 


5.70 


114 


66.0 


4.50 


. 90 


30.0 


5. 75 


115 


67.5 


4. 55 


91 


31.5 


5.80 


116 


69.0 


4.60 


92 


33.0 


5.85 


117 


70.5 


4.65 


93 


34.5 


5.90 


US 


72.0 


4.70 


94 


36.0 


5.95 


119 


73.5 


4.75 


95 


37.5 


6.00 


120 


75.0 



And so on in like proportion. 



THIRD. LABORERS ENTITLED TO BONUS. 



(A) Day-wage laborers and short-term contractors. — (V) All laborers on a day-wage 
basis receiving wages of $24 per month and under and all short-term contractors shall 
be entitled to a bonus provided they work, in the case of men, not less than 20 days 
per calendar month, and in the case of women, not less than 15 days per calendar 
month. 



164 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

(2) To these laborers 20 per cent of their monthly earnings shall be paid monthly 
on account of the annual bonus due October 31, and if they shall thereafter continue 
in the employ of the same plantation until the end of the bonus period they shall then 
be paid the balance of the bonus, if any. 

(B) Cultivating contractors. — (1) Cultivating contractors shall be paid a bonus on 
the basis of wages at the rate of $24 per month of 26 days in the case of men, and $18 
per month in the case of women, provided they work not less than 20 days in any 
calendar month in the case of men and 15 days in any calendar month in the case of 
women. 

(2) To these cultivating contractors, 20 per cent of their monthly wage, calculated 
on the above basis, shall be paid monthly on account of the annual bonus due October 
31, and the balance of the bonus, if any, shall be paid at the end of the bonus period. 

FOURTH. CONTRACTS BASED OX PRICE OF SUGAR. 

None of the above provisions in regard to the payment of bonus shall apply to the 
contractors whose contracts are settled according to the price of sugar. 

FIFTH. SETTLEMENT PERIODS AND PARTICIPATION. 

The first settlement under this amended bonus shall be made on the May, 1916, 
pay day for the months of April and May. 

All laborers entitled to a bonus, who are working on a plantation on October 31, shall 
be paid the full amount of the bonus for each and every month of the bonus period 
during which they have worked on such plantation 20 days per calendar month in 
the case of men and 15 days per calendar month in the case of women, less what they 
have received as a monthly advance as hereinabove provided. 

If the laborer shall have been excused from work by the manager because of physical 
disability, or other good reason, the loss of time caused thereby shall not be construed 
to deprive him of the entire amount of the bonus, but he shall be entitled to a propor- 
tion of the same for the number of days work performed. 

In addition, the various plantations have adopted a different 
schedule of bonus to be applied to skilled laborers (from manager 
down), the directors of one of the largest plantations having decided 
to pay a bonus of 20 per cent on the earnings of 1916 to this class of 
employees. No conditions are attached to this bonus as to the num- 
ber of days to be worked, nor is it regulated by the price of sugar. 
In other words, no matter what the price of sugar may be during 
the year, every skilled employee on this plantation will receive for 
1916 a bonus of 20 per cent on his earnings. 

ANOTHER SO-CALLED COOPERATIVE WAGE SYSTEM. 

The cooperative wage system of a certain company was put in 
operation in 1911. It is a plan for equally distributing between 
employer and employees the savings collectively effected in labor costs, 
either through the increased efficiency of labor itself or the intro- 
duction of improved machinery or improved methods of work. The 
plan requires the division of the several shops into departments, each 
department being made a cooperating unit. Every member of the 
organization in each department, from foreman to errand boy, 
inclusive, is employed under this plan. 



PEOFIT SHARING IX THE UNITED STATES. 165 

With each cooperative department an account is opened which is 
known as the departmental cooperative wage account. To this account 
is charged the actual labor cost in the department for work finished 
during the week. To this amount is added the proportionate 
indirect labor expense of the department for the same period. The 
account is at the same time credited with the " standard labor value." 
It needs to be stated that every operation on each item of product is 
given a standard labor value, which is carefully determined before the 
first order for work on a part is issued to the shops. These values 
include allowances for both direct and indirect labor costs of the 
product. Once set, the standard labor values remain unchanged 
regardless of the savings subsequently effected because of increased 
efficiency of labor itself, of the introduction of new machinery, or 
of any other reason. 

The difference between the actual expenditure for labor on the 
total product of the department and the corresponding labor value 
taken at standard labor rates, when the former is less than the latter, 
indicates a saving due to increased efficiency in the department. 
It is this saving which is then divided equally between the company 
and its employees. 

The employees' share of the saving is apportioned to them on the 
basis of their earnings during the period in which the saving is made. 
It is the practice to place a statement before the employees once 
each week setting forth the exact facts concerning the saving. The 
results of the working of the plan in one of the departments in 1915 

is shown below. 

Erecting and testing department, 1915. 

Standard labor value of product completed during the year, as 

per detailed schedules on file with foreman §47, 618 

Actual expenditure for wages charged direct to said orders and 
proportionate expenditure for indirect labor charges for the 

year; foreman, shop laborers, tool repairs, etc 30, 172 

Difference being saving effected on product completed during 

the year 17, 446 

One-half of the saving is 8, 723 

The actual pay roll of the department for the year is 30, 172 

The bonus percentage for cooperative effort, which bonus is to 

be added to each man's wages for the year is 28.8 per cent. 

(Participated in by all of the employees of the depart- 
ment — 54.) 

The introduction of the cooperative wage system into departments 
which had been operating on piecework and individual bonus 
schemes required the rerating of all employees in such departments 
on a day-wage basis which guaranteed returns equal to those secured 
previous to the introduction of the plan and which also gave a cor- 
respondingly just basis for the distribution of savings effected by 
the organization as a whole. Such action showed the workmen that 



166 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

the change was made in the spirit of fairness and that the com- 
pany, even before the results justified such action, placed confidence 
in its individual employees to make a success of the new plan. 

Standard labor rates on all product of the shops which had been 
made previous to the installation of the cooperative wage system 
were figured at actual labor cost as of the date when the cooperative 
wage system went into effect. Standard labor rates for all new work 
placed in the shops subsequent to the installation of the cooperative 
wage system are figured by an experienced mechanic, who in setting 
these rates bases them on labor costs such as are to be expected in 
the best of competitive shops. 

DISCONTINUED PLANS. 

A number of inquiries were addressed to employers who were 
known as having had profit-sharing plans in operation in the past. 
The following were given by 26 of them as the causes for discontinu- 
ance of their respective plans: (1) Plan didn't satisfy employees, 8; 
(2) men went out on strike, 5; (3) men preferred increase in pay, 5; 

(4) plan did not increase interest or efficiency of employees, 4; 

(5) plan benefited undeserving employees, 2; (6) plan did not tend 
to increase the stability of the force, 1 ; (7) general upward trend 
of wages and competition, 1. Thus from the reasons gi^en for the 
discontinuance of the plans it may be inferred that the above-men- 
tioned phenomena were not expected to occur with the principle of 
profit sharing in operation and that their occurrence made its fur- 
ther application unwise. 

Mr. W. W. Nearing, vice president of the Pejepscot Paper Co., of 
Brunswick, Me., writes: 

Briefly, would say that we tried at our mills a number of years ago 
a system which consisted in arriving at the profits for the year, de- 
ducting 6 per cent on the capital employed, and consider the balance 
profits on the business operation, part of which was set aside as a 
labor dividend. The trial was simply preliminary to try to work 
something out of it and was fairly satisfactory as long as the profits 
warranted a substantial return to labor; but in off years, when it did 
not yield as much, it caused so much dissatisfaction and ill feeling 
that we decided to abandon it. 

Mr. Thomas Elder, of the Elder & Johnston Co., merchants of Day- 
ton, Ohio, describing the experiences of the company in profit sharing, 
concludes : 

Up to the present time, nowever, we have not found any plan that 
works satisfactorily to both the employees and the employer. In the 
first place, in season of prosperity, when the profits and earnings were 
large, the employee thought it a fine thing; but in the off years, when 
the company's earnings were reduced by business depressions or some 



PROFIT SHARING IN THE UNITED STATES. 167 

other causes which come to all business concerns, the employee could 
not see any advantage, and it always resulted in dissatisfaction. 

Another informant, one of the executive officers of the Austin H. 
Perry Co., of Haverhill, Mass., states: 

We made two distributions and, as the number participating in the 
distribution increased the second year, which necessarily made the 
amount received by each individual decrease, we found that there was 
a great deal of dissatisfaction; and we felt, for the interest of our busi- 
ness, that it would be better for us to discontinue the profit-sharing 
plan. 

The profit-sharing plan in operation in the printing establishment 
of the Wright & Potter Co., of Boston, Mass., was discontinued on 
account of its being " entirely unsatisfactory, because it applied only 
to certain favored ones — journeymen and printers only — thereby 
causing so much complaint and friction that the company abandoned 
all efforts in that direction after trying the same either one or two 
years. " 

A profit-sharing plan in operation some years ago in the wholesale 
dry-goods establishment of the E. Guthrie Co., of Paducah, Ky., was 
abandoned because "it was found that the employees did not appre- 
ciate the plan and took very little interest in it." 

The Peacedale Co., manufacturers of woolens, of Peacedale, K. I., 
abandoned its profit-sharing plan because "it was found that it did 
not satisfy the employees." 

The following firms abandoned profit-sharing plans because of the 
fact that their employees struck: S. M. Jones Co., Toledo, Ohio; the 
Rogers Peet Co., New York, N. Y. ; Parsons Paper Co., Holyoke, Mass. ; 
Brewster & Co., carriage makers, New York, N. Y.; Driver-Harris 
Ware Co., Harris, N. J. 

The Columbus Railway & Lighting Co., of Columbus, Ohio; the 
Thomas G. Plant Co., shoe manufacturers, Boston, Mass.; the C. G. 
Conn Co., manufacturers of musical instruments, of Elkhart, Ind. ; the 
New England Granite Works, of Westerly, R. I., and the Washing- 
ton (D. C.) Railway & Electric Co., abandoned their respective plans 
because the employees insisted upon increases in wages. 

The Theo. L. De Yinne Co., printers, of New York, N. Y., abandoned 
their plan because same did not prove to be " an incentive to increased 
efficiency." For similar reasons the profit-sharing plans of Spratt's 
Patent (America) (Ltd.) Co., of Newark, N. J., and of the Hoffman 
& Billings Co., of Milwaukee, Wis., were abandoned. 

The Saugerties Manufacturing Co., of Saugerties, N. Y., and the 
John T. Connor Co., importers and wholesale grocers, of Boston, Mass., 
give as the reason for the discontinuance of the system of sharing of 
profits with their employees the fact that "it was considered that 
many profited who were not entitled to it." 



168 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

Mr. Rodney E. Ross, treasurer of the Hyde Windlass Go., manur 
facturers of steel gears and brass castings, of Bath, Me., gives as the 
reason for the abandonment of their profit-sharing plan " the gen- 
eral upward trend of wages during the years immediately preceding 
the abolishment of the profit-sharing plan/' 

About 25 years ago Mr. A. Reinle, then the sole proprietor of the 
Reinle-Salmon Co., manufacturers of showcases and fixtures, of Bal- 
timore, Md., introduced a profit-sharing system among a limited 
number of his employees, determined by service and responsibility. 
Under this system approximately 50 per cent of the profits of 
the firm was distributed among the participants. As the business 
grew and developed, Mr. Reinle realized that his share of the 
profits was being absorbed by improvements and extensions of the 
business, while the profit-sharing employees received their share 
in cash. He became convinced that those who were receiving or 
participating in the profits of the business should also assume the 
risk incident to the business. Accordingly, a corporation was formed 
in 1903, and approximately 60 per cent of the stock was distributed 
to the heads of the departments and others, with the understanding 
that same was to be paid for out of the dividends accruing until the 
par value had been paid. 

Since 1903 no stock distribution of any sort has taken place. On 
January 1, 1916, about one-fifth of the total employed (about 100) 
were interested in the company as stockholders. Of this number 
six (officers of the company) own about 80 per cent of the stock, 
the remaining employees who are stockholders holding from one 
to five shares each. Mr. Reinle, the founder of the business and 
its present general manager, thinks that although the plan enabled 
some of the executive employees to make considerable amounts of 
money, the business has suffered on account of lack of harmony; 
somehow or other "an employee stockholder is an employee first and 
a stockholder second." In managing the business Mr. Reinle finds 
great difficulty in manipulating the services of his important em- 
ployees, all stockholders, because "most of them refuse to enter into 
any esprit de corps and lack business knowledge to grasp the situa- 
tion." 

In 1914 the Miami Copper Co., of New York City, employing about 
1,000 people, announced for the benefit of employees a plan of stock 
subscription in line with plan designated as No. 4, on page 148 of 
this report. This plan, however, was abandoned within less than 
one year, because "only 40 of a total of 1,000 participated, and the 
plan entirely failed to benefit those men whom it was primarily 
designed to benefit, namely, the wage earners, practically all those 
subscribing being salaried men." 



PROFIT SHARING IX THE UXITED STATES. 169 

EXTENT TO WHICH OBJECTS SOUGHT BY ESTABLISHMENT 
OF PROFIT-SHARING PLANS HAVE BEEN REALIZED. 

The principal objects of the establishment of the profit-sharing 
plans described in this report were stated by the employers to be as fol- 
lows : (1 ) To stimulate the elimination of waste and to foster economy, 
(2) to increase efficiency, (3) to stabilize the working force, and (4) 
to improve relations between the management and its employees. 1 

One of the interviewed employers, a leader and advocate of profit 
sharing in New England, stated that the object of profit sharing is 
"to furnish additional stimuli for increased efficiency in establish- 
ments where piecework or any other efficiency method, for some 
reason or another, can not successfully be applied." Accordingly, 
the application of the profit-sharing principle is "undesirable and 
unwise where more direct stimuli, such as bonuses on individual 
efficiency or output, may be applied." A strikingly similar point of 
view, seemingly prevalent among most of the profit-sharing employers, 
is presented by the vice president of the Executives' Club of Detroit 
in an article entitled, "Where profit sharing fails and where it suc- 
ceeds." 2 The author says: 

Considered merely as a stimulus to increased production and greater 
net gain, profit sharing is of particular value in plants where (1) indi- 
vidual efficiency can not yet be exactly measured, or where, (2) much 
work is done far away from supervision, or where (3) longevity of 
service is necessary to preserve the quality of the product or to guard 
trade secrets, or where (4) a supplement to the wage system pro- 
moting individual efficiency is needed to minimize plant waste. In 
other cases, where the motives are merely practical, better results are 
obtained by improvements in working conditions, by increases in 
wages, and by the payment of these increases upon the basis of 
individual efficiency. 

One employer stated that "the purpose of the employees' profit- 
sharing fund is not alone to enable each employee to share in a pro- 
portion of the net profits earned by the firm, but also to be an addi- 
tional incentive for each employee to give the maximum of service to 
the firm." 

An employer in New England with a profit-sharing plan in opera- 
tion for the benefit of his executive, supervisory, and sales people 
gives as the reason. for the introduction of his plan the fact that 
the plan "places the responsibility of maintaining a wise manage- 
ment upon the principal workers and offers them a reward commen- 
surate with their collective and individual efforts, but makes this 
reward fully contingent upon their performing their whole obligation. 

1 On page 1GG of this report additional light is thrown on the reasons that prompt employers in the 
initiation of profit-sharing schemes by an examination of the causes specified by some employers as 
having been responsible for the discontinuance of plans known to have been in operation in (heir estab- 
lishments. 

8 The System Magazine, March, 1916. 



170 BULLETIN OF THE BUKEAU OF LABOR STATISTICS. 

It offers to the present capital owners a property whose permanent 
value is trebly safeguarded and whose return is practically as certain 
as the return on a bond." 

Of all the interviewed employers only three stated that the main 
object of their respective plans was to furnish "an equitable dis- 
tribution of the profits of the undertaking, as a matter of justice, ir- 
respective altogether of hopes for increased efficiency." The correct- 
ness of these reasons is substantiated by the fact that their plans 
are unusually liberal to the employees, two of them distributing 
all their profits over and above what is thought to be a moderate 
return on their investments, and the third, one-third of all the net 
profits. One of the first two gave as the reason for the existence of 
his plan the fact that he was the owner of more property than he 
needed, that as this property was created in the business, through the 
efforts of his employees, he now wanted them to have the benefit of it. 

As the immediate cause for the launching of their plans most of 
the informants gave the fact that they had learned from fellow em- 
ployers and periodicals that such plans worked well and in the 
interest of all concerned. 

In order to discover the precise extent to which the hopes of em- 
ployers in the establishment of the plans were realized, they were 
asked to state the result as to — 

(1) Improvement of relations with their employees; 

(2) Increase of permanency of their working force, and 

(3) Increase of efficiency. 

The following represent a summary of their statements. 

IMPROVEMENT OF RELATIONS BET WEEN EMPLOYERS AND EMPLOYEES. 

The consensus of opinion, almost unanimous, seems to be that the 
plans did have a very decided tendency to establish more satis- 
factory relations between employer and employee. This seems to be 
particularly true of establishments where the profit-sharing plans 
have been in operation for a considerable length of time. Under the 
influence of the plans, employers report, a sort of esprit de corps de- 
veloped. The plans, they further say, make the employees realize 
that their employers are treating them fairly and squarely. 

INCREASED PERMANENCY OF WORKING FORCE. 

All of the informants without exception were also of the opinion 
that the establishment of the plans had a tendency to reduce the 
percentage turnover of their working organization. One of the em- 
ployers describes this effect as follows: "It works precisely like an 
increase in wages, but is more valuable because the employee, in 
order to receive his share, has to wait till the end of the distribution 
period, a fact that makes him hesitate before quitting which would 
naturally involve the forfeiting of his share in the profits." Another 



PROFIT SHARING IN THE UNITED STATES. 171 

employer emphatically states that his "valuable help would cer- 
tainly have been stolen had the plan not been in operation." Still 
another, whose plan has been in operation since 1899, and paid 
profit-sharing dividends ranging from 50 to 100 per cent of earnings, 
states that his working force "is rather permanent now, more so than 
in the years gone by; we attribute this fact to the plan." The 
general manager of another establishment thinks that "the company 
has positive proof that its skilled help is far more permanent now, 
and because of the plan." "We have noticed a great improvement 
in the quality and permanency of our force since the plan was put 
into operation," writes another. 

INCREASED EFFICIENCY. 

Although substantially agreeing that the plans have greatly im- 
proved their relations with the employees and contributed con- 
siderably to the stabilization of their working force, employers dis- 
agree greatly as to the results achieved with reference to increasing 
the individual or collective efficiency of the participating employees. 
In all, only three of them stated definitely that this has been the 
result. All of these have paid unusually high profit-sharing divi- 
dends to their employees in the past. "The plan," says one of these 
employers, "developed the individual sense of responsibility, in- 
creased thrift, and increased efficiency." It should be noted, as 
throwing some light on this opinion, that under the plan in opera- 
tion in this establishment since 1903 profit-sharing dividends ranging 
from 16 to 24 per cent of the annual earnings of the participants 
were paid. Another employer under whose plan unusually large 
shares of profits were paid — shares ranging from 50 to 100 per cent of 
annual earnings — believes that the "profit-sharing scheme has made 
the empk^ees more efficient. It has removed all friction between 
the company and its employees." 

A manufacturing chemist whose plan has been in operation since 
1887, paying shares of profits ranging from 5 to 15 per cent of annual 
earnings, is "not certain that the plan leads directly to increased 
efficiency, although it apparently tends to increase the permanency 
of the working force — a factor conducive to increased efficiency." 
A manufacturer of insulated wires and cables, whose plan appears to 
be the least arbitrary of all examined, and under which participa- 
tion dividends ranging from 8 to 20 per cent of wages have been 
paid since 1901, expresses his opinion as follows: "The plan has a 
tendency to keep men awake, but not necessarily hustling; however, 
it does make them more interested in their work. If there is no 
material difference to the employee he would rather do his work well. 
Our people are a good deal more permanent now [1915] than they 
were. This fact is to be attributed to the profit-sharing plan, as we do 
not penalize our employees for leaving." 



LIST OF REFERENCES (IN ENGLISH) ON PROFIT SHARING. 
PROFIT SHARING IN THE UNITED STATES. 

BOOKS AND PAMPHLETS. 

Adams, Thomas S., and Sumner, Helen L. Labor problems; a textbook. New 
York, Macmillan, 1905. Appendix B. Profit sharing in the United States. 
pp. 555-558. Profit sharing, by H. L. S. pp. 333-378. Descriptive and critical 
account; elementary but inclusive. 

Alexander Hamilton Institute. New York. . Modern business service. [New York, 
cl914] 21 leaves. 

American Telephone and Telegraph Co. New York City. Annual report for 1914. 
New York, 1915. Profit sharing, pp. 29-36. 

Ashley, Ossian D. Railways and their employees. Chicago, The Railway Age, 1895. 
Profit sharing, pp. 71-79. Examples of cooperative methods, pp. 80-97. 

Babson conference on cooperation, 2d, Wellesley Hills, Mass., 1915. Summary of 
2d annual conference on cooperation. Wellesley Hills, 1915. 10 pp. (Reprint 
of a supplement to Babson's reports on fundamental business conditions, issued 
Oct. 19, 1915.) 

Babson's Statistical Organization. Wellesley Hills, Mass. Confidential bulletin of 
the cooperation sendee. No. L-l, March, 1914, to date. W T ellesley Hills, 1914, 
to date. Various numbers contain descriptions of specific plans, e. g., L-59 for 
August, 1916, describes the new profit-sharing plan of the American Multigraph Co. 

Barnett, Maurice. A plea for profit sharing. Presented at the 15th annual conven- 
tion of the National Metal Trades Association, New York City, April, 1913. [New 
York, 1913] 10 pp. 

Barnes, Albert. Division of profits. Chicago, Press of the American Building Associ- 
ation News, 1894. 22 pp. Paper read at the annual meeting of the Building 
Association League of Illinois, held at Galesburg, June 13, 1894. 

Barns, William E., editor. The labor problem; plain questions and practical answers. 
New York, Harper, 1886. Plea for profit sharing, pp. 200-230. 

Boley, Daniel C. Profit-sharing investments. Profit-sharing bonds versus capital 
stock of corporations as a means of profit sharing. [Chicago, cl895] 32 pp. 

Borden Milk Company Employees Investment Association. Plan, constitution, and 
by-laws. Dated July 1, 1914. [n. p., 1914] 27 pp. 

Boston Consolidated Gas Company. Profit sharing with employees. Boston, 1906. 
8 pp. 

Carlton, F. T. History and problems of organized labor. Boston, Heath, 1911. 
Industrial remuneration, pp. 190-227. 

Carnegie, Andrew. Presidential address. (Profit sharing.) London, Offices of the 
Iron and Steel Institute, [1903] 37 pp. Appendix: Circular issued by the 
United States Steel Corporation regarding its profit-sharing scheme. (Reprinted 
from the Journal of the Iron and Steel Institute, number 1 for 1903.) 

Cleveland. Chamber of Commerce. Committee on industrial welfare. Industrial 
profit sharing and welfare work. [Cleveland, 1916] 85 pp. 

Cooperation. A magazine of economic progress. Vol. 1-6; April, 1909, to December, 
1914. Minneapolis, Minn., 1909 to 1914. Monthly. (Suspended publication, 
December, 1914.) ■ 

Copartnership. The organ of the Labour Copartnership Association and the Copart- 
nership Tenants Housing Council. Vol. 1, 1895 to date. London, 1895 to date. 
Monthly. 

Dennison Manufacturing Co. South Framingham, Mass. Articles of association and 

by-iaws. South Framingham, Lakeview press, 1914. 33 pp. 

173 



174 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

Dennison Manufacturing Co. Industrial partnership plan. n. p., n. d. 7 pp. 

Dolge, Alfred. Just distribution of earnings. So-called profit sharing; being an 
account of the labors of Alfred Dolge in the town of Dolgeville, V. S. A. New- 
York. Printed for the section, "Participation du Personel dans les Benefices," 
Paris exposition, 1889. 93 pp. 

Doolittle, James R. Special address . . . on the liberty of pursuit as affected by com- 
binations of either labor or capital, before the Illinois State Bar Association. 
Springfield, Barnard, [1893] 10 pp. 

Duffy, James F. The ideal solution of the labor problem. (Cooperation and profit 
sharing.) Chicago, Duffy Manufacturing Co., 1914. 32 pp. 

Eliot, Charles W. Profit sharing. (In Profit sharing and scientific management. 
Four addresses. Boston, Efficiency Society of New England, 1914. pp. 3-9.) 

Ely, Richard T. The labor movement in America. New edition. New York, Mac- 
millan, 1905. Productive cooperation, pp. 180-195. Includes account of the 
profit-sharing plan of Pillsbury and Co., Minneapolis, Minn. 

Employer and employed. Vol. 1-4; October, 1892 to January, 1896. Boston, 1892 to 
1896. 4 vols, in 1. "Published for the association for the promotion of profit 
sharing." 

Fay, Charles R. Copartnership in industry. New York, Putnam, 1913. 146 pp. 
Outline of history of copartnership, .with illustrations of various types. Profit 
sharing in England and France. 

Fernley, Thomas A. The profit-sharing system as a plan of remunerating traveling 
salesmen. Philadelphia, 1915 (?) 12 pp. 

Ford, Henry. The Ford plan; a human document. Report of the testimony of 
Henry Ford before the Federal Commission on Industrial Relations, Jan. 22, 1915. 
New York, Anderson, [1915] 8 pp. 

Ford Motor Co., Detroit. Helpful hints and advice to employees to help them grasp 
the opportunities which are presented to them by the Ford profit-sharing plan. 
Detroit, Ford Motor Co., 1915. 41 pp. 

Gantt, H. L. A bonus system of rewarding labor. [New York, 1901] 20 pp. "To 
be presented at the New York meeting, December, 1901, of the American Society 
of Mechanical Engineers, and forming Part V of Vol. XXIII of the Transactions.' ' 

- — Work, wages, and profits. New York, Engineering Magazine, 1910. 194 pp. 

Giddings, F. H., and Johnson, A. S. Profit sharing. (In New International Ency- 
clopedia. New York, 1909. Vol. 16, pp. 433-434.) Digest of subject up to 1904, 
with concise analyses of successful experiments at Maison Leclaire, Bon Marche, 
Proctor & Gamble, N. O. Nelson, and United States Steel Corporation. Estimate 
of value of profit sharing. 

Gilman, Nicholas Paine. Cooperation and profit sharing. Boston, Wright, cl900. 
8 pp. (Monographs on American social economics. XII.) 

A dividend on wages. (In Peters, J. P., editor. Labor and Capital. New York, 

Putnam, 1902. pp. 330-343.) 

A dividend to labor; a study of employers' welfare institutions. Boston, 

Houghton, 1899. 400 pp. Part 3: A direct dividend to labor — profit sharing. 
(Reviewed by J. Carter in Economic Review, April, 1900. Vol. 10: 286-288.) 

Industrial partnership or profit sharing. A word to the employer. Boston, 

Printed for the Association for the Promotion of Profit Sharing, 1893. 18 pp. 

Profit sharing. (In Bliss, W. D. P., editor. New Encyclopedia of Social 

Reform. New York, Funk and Wagnalls, 1908. pp. 962-966.) "Objections to 
profit sharing. ' ' pp. 965-966. 

Gilman, Nicholas P. Profit sharing between employer and employee. Boston, 
Houghton, 1896. 460 pp. History of product and profit sharing, with descrip- 
tions of cases in Europe and America prior to 1889, summary and analyses; argu- 
ments for the system. 1st edition, reviewed in Nation, May 2, 1889. Vol. 48, 
p. 370. 



PROFIT SHARING IN THE UNITED STATES. 175 

GreatBritain. Boardof Trade. Profit sharing and copartnership abroad. Report . . . 

London, 1914. 164 pp. (Cd. 7283.) (This supplements the 1912 report (Cd. 

6496). Gives statistics for France, Germany, and the United States. Reviewed 

in the Labour Gazette for April, 1914, vol. 22: 122, 123; Sept., 1914, vol. 22: p. 

235.) 
Report on "gain-sharing" and certain other systems of bonus on production. 

London, 1895. 132 pp. Supplement to report by Mr. D. F. Schloss. 
Gregory, Theodore. Labour copartnership and labour unrest. London, Hey wood, 

1913. 28 pp. 
Hale, Edward E. How they lived in Hampton. A study of practical Christianity 

applied in the manufacture of woolens. Boston, Smith, [cl888] 281 pp. 
Halsey, F. A. Experience with the premium plan of paying for labor, [n. p., 1899] 

23 pp. Reprinted from the American Machinist, Mar. 9, 1889. 
The premium plan of paying for labor. (In American Economic Association. 

Economic studies. April, 1896. Vol. 1, pp. 75-88.) 
Harrison, Fairfax. Are we ready for industrial cooperation? An address before the 

State convention of the Indiana Y.M.C.A., Hammond, Nov. 22, 1912. [Chicago, 

1912] 10 pp. 
Henderson, Charles R. Citizens in industry. New York, Appleton, 1915. 341 pp. 

Profit sharing, pp. 117-140. 
History of cooperation in the United States. Baltimore, 1888. 540 pp. (Johns 

Hopkins University studies in historical and political science. 6th series.) See 

index under "Profit sharing." 
Ingalls, Melville E. A plea for profit sharing. (In National Civic Federation, 

9th annual meeting. 1908. New York, 1909. pp. 38-41.) 
International Cooperative Alliance. Reports of proceedings of congresses. 1st, 1895 

to date. (Especially the report of the 5th congress, held at Manchester in 1902. 

London, King, 1902. Contains "Reports on profit sharing in various countries." 

pp. 153-220.) 
International Efficiency Society. Loss-sharing, [n. p., 1915?] 4 typewritten 

leaves. 
Iowa. Bureau of labor statistics. Cooperative railroading (stock ownership). (In 

its 8th biennial report, 1897-1898. pp. 13-15. Des Moines, 1899.) Plan of 

the Illinois Central Railroad System. 
Kent, William. A problem in profit sharing. [New York, 1887] 4 pp. "Pre- 
sented at the XV meeting of the American Society of Mechanical Engineers, 

Washington, 1887." Published also in Transactions of the American Society of 

Mechanical Engineers, vol. 8, 1886-87, pp. 630-633. Discussion, pp. 633-662. 
Knoeppel, Charles E. The psychology and ethics of wage payment. A lecture on 

piecework and the bonus system before the class in scientific management, 

Springfield, Mass., Y. M. C. A., Dec. 11, 1912. New York, [1912] 25 pp. 
Labour Copartnership Association, London. Reports and Proceedings. 
Latib, D. Kenneth. An investigation . . . of . . . profit sharing . . . [Detroit, 

1914] 27 pp. Ford Motor company's work with profit sharing. An investigation 

by the Detroit Evening News. Nov. 24, 1914. 
Lee, John R. The so-called profit-sharing system in the Ford plant. (In Annals of 

the American academy of political and social science. Philadelphia. May, 

1916. Vol. 65, pp. 297-310.) 
Levasseur, P. E. American Workmen. Baltimore, J. H. U. press, 1901. Profit 

sharing, pp. 468-477. 
Massachusetts. Bureau of statistics. Current comment on labor questions; profit 

sharing. (In its Bulletin number 36, June, 1905. Boston, 1905. pp. 130-139.) 
— Profit sharing, by Franklin H. Giddings. (In 17th annual report of the 

Massachusetts Bureau of Statistics for 1886. Boston, 1886. pp. 155-236.) 



176 BULLETIN OF THE BXJEEAU OF LABOR STATISTICS. 

Massachusetts. Bureau of statistics. Profits to labor. (In its 21st annual report 
for 1890. Boston, 1891. p. 562 ff.) 

Minneapolis Civic and Commerce Association. Committee on industrial welfare. 
Report. [Suggestive plans for the establishment of profit sharing, stock purchase, 
industrial insurance . . . associations] [Minneapolis] 1916. 18 leaves. 

National Civic Federation. Welfare department. Profit sharing by American 
employers; percentage of profits, special distributions, stock for wage earners, 
exceptional — abandoned — proposed plans; examples from England. Types in 
France. New York, Welfare department of the National Civic Federation, 
1916. 261 pp. "An extensive investigation and analysis of more than 200 
plans in the United States, undertaken with a view to presenting an accurate 
and unbiased statement of the facts." 

Nelson, N. O. Associated workers idea. (In Peters, J. P.. editor. Labor and Capi- 
tal. New York, Putnam, 1902. pp. 344-352.) 

Cooperation and profit sharing. (In Jones, Samuel M. The new right. New 

York, Eastern book concern, 1899. pp. 323-356.) 

° Profit sharing. St. Louis, 1887. 40 pp. Reprinted from the Missouri Repub- 
lican, Oct. 11, 1886. 

Parks, G. M., Co., Fitchburg, Mass. Profit sharing for 1915. [Fitchburg, 1915.J 

4PP; 

Pomeroy, Eltweed. Democracy versus profit and prosperity sharing. (In Peters, 
J. P., editor. Labor and Capital. New York, Putnam, 1902. pp. 353-357.) 

Proctor & Gamble Co., Cincinnati, Ohio. Addresses of Washington Gladden, "The 
relations of capital and labor"; Benjamin Butterworth, "Higher citizenship," 
on the occasion of the 17th semiannual dividend meeting of the Proctor & Gamble 
Co. at Ivorydale, Ohio, Feb. 3, 1896. [Ivorydale, 1896] 32 pp. 

Revised plan for trust receipt dividends for employees through stock ownership. 

n. p., 1913. 13 pp. 

Profit sharing. (In Information Annual, 1915. New York, Bowker, 1916. pp. 
467^69.) 

Profit sharing and copartnership. Vol. 1-2, June, 1912, to October, 1913. London, 
1912-1913. Monthly. Amalgamated with copartnership after October, 1913. 

Profit-sharing plan and bonus fund of the United States Steel corporation. (In 
Pittsburg survey; finding . . . Edited by Paul U. Kellogg. Vol. 4. New 
York, Survey Associates, 1911. pp. 306-324.) 

Simplex Wire & Cable Co., Boston. Profit sharing. Address by President Everett 
Morss at the May, 1913, meeting of the Electrical Manufacturers Club at Hot 
Springs, Va. Boston, [Simplex Wire & Cable Co., 1913] 14 pp. Includes 
profit-sharing rules of the company for 1914. 

Solvay Process Co. Syracuse, N. Y. Profit sharing, pensions, mutual aid, and wel- 
fare work. January, 1915. 8 pp. 

Stanford, Leland. Cooperation of labor. Report of an interview . . . which 
appeared in the New York Tribune, May 4, 1887. [New York? 1887?] 20 pp. 
Pp. 17-20. A bill to encourage cooperation, introduced in the Senate by Senator 
Stanford, 1886. 

The Studebaker Corporation. South Bend, Ind. Employees * profit-sharing announce- 
ment. 1913. [South Bend, 1913.] 9 pp. 

Sumner, Helen L. See Adams, Thomas S.., and Sumner, Helen L. 

Taylor, Frederick W. Competitive profit sharing. (In Profit sharing and scientific 
management. Four addresses. Boston, Efficiency Society of New England, 
1914. pp. 10-15.) 

Tolman, William H. Social engineering; a record of things done by American .indus- 
trialists . . . New York, McGraw, 1909. 384 pp. 



PKOFIT SHAE1NG IX THE UNITED STATES. 177 

Towns, Henry R. The adjustment of wages to efficiency ; gain-sharing. (In American 
Economic Association. Economic studies. June, 1896. Vol. 1, pp. 51-73.) 
Concise discussion of the gain-sharing, contract work, and piecework systems. 
Townsend, George R. The cooperative wage system. A description of the plan for 
sharing labor savings between employer and employees, developed and intro- 
duced at the Henry R. Worthington Hydraulic Works, Harrison, N. J. [n. p., 
1914.] 9 pp. (Prepared for the . . . Babson Statistical Organization confer- 
ence on profit-sharing . . . held in Wellesley Hills, Mass., October, 1914.) 
United States Bureau of Labor. References on profit sharing may be found in the 

following reports. 
1st Annual Report. 1886. Industrial depressions; Profit sharing, pp. 279-286. 
8th Special Report. 1895. Housing of the working people, pp. 339. 
Bulletin 6, September, 1896. Industrial communities; Familistere Society of 

Guise, France, by W. F. Willoughby. pp. 582-589. 
Bulletin 7, November, 1896. Industrial communities: Netherlands Yeast and 

Alcohol Factory, Agneta Park, Delft, Holland, by W. F. Willoughby. pp. 716. 
Bulletin 31, November, 1900. The betterment of industrial conditions, by V. H. 

Olmsted, pp. 1138-1140; 1147; 1150; 1151. 

Condition of railway labor in Italy, by Dr. Luigi Einaudi. System of gain 
sharing in the stations, pp. 1232-1254. 
Bulletin 34, May, 1901. Social economics at the Paris exposition, by N. P. 

Gilman. pp. 445, 446. 
Bulletin 43, November, 1902. Report to the President on anthracite coal strike, 

by Carroll D. Wright, pp. 1158; 1159; 1205. 
Report. 1911. Conditions of employment in the iron and steel industry in the 

United States. Vol. III. Working conditions and the relations of employers 

and employees, pp. 461-469. (62d Cong., 1st sess., S. Doc. No. 110.) 
Report. 1910-1912. Report on condition of woman and child wage earners in 

the United States. Vol. 1. Cotton textile industry, pp. 343-345. (61st 

Cong., 2d sess., S. Doc. 645.) 
Bulletin 112. 1912. Decisions of the court affecting labor. Profit-sharing by- 
laws of corporations — rewards — acceptance of offer, by L. D. Clark, pp. 

178-181. 
Bulletin 123. May 15, 1913. Employers' welfare work, by Elizabeth L. Otey. 

pp. 32, 39, 60, 69. 
Williams, Aneurin. Copartnership and profit sharing. New York, Holt, 1913. 

256 pp. 
Wing, George C. Applied profit sharing. [Cleveland, Gardner Printing Co., cl912.] 
13 pp. United States Steel Corporation. 

ARTICLES IN PERIODICALS- 

1886. Snow, F. E. The legal aspects of industrial copartnership. American Law 

Review, September-October, 1886, vol. 20: 698-702. 

1887. Giddings, F. H . The theory of profit sharing. Quarterly Journal of Economics, 

April, 1887, vol. 1: 367-377. 
Gilman, N. P. Profit sharing. Forum, September, 1887, vol. 4: 96-104. 
Kingsbury, F.J. Profit sharing as a method of remunerating labor. American 

Social Science Association. Journal, November, 1887, vol. 23: 25-36. 

New Englander and Yale Review, November, 1887, vol. 47: 333-345. 

Nelson, N. O. Profit sharing. North American Review, April, 1887, vol. 144: 

388-394. 
Powell, George M. Profit sharing, historically and theoretically considered. 

American Social Science Association. Journal, November, 1887, vol. 23: 

47-57. Discussion: 58-67. 
56831°— Bull. 208 12 



178 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

1887. Richard, Ernst. Mr. Alfred Dolge and his employees. American Social 

Science Association, Journal, November, 1887, vol. 23: 37-46. 
1889. Ray, W. H. Profit sharing. Dial, May, 1889, vol. 10: 5-9. 

1891. A new departure in profit sharing. Chambers Journal, September 19, 1891, 

vol. 68: 596-598. (Dolge Manufacturing Co., Dolgeville, N. Y.) 
Profit sharing in the Pillsbury mills. American Review of Reviews, Sep- 
tember, 1891, vol. 4: 172-174. 

1892. Dolge, Alfred. Economic distribution of earnings v. profit sharing. Social 

Economist, January, 1892, vol. 2: 129-140. 
Gilman, N. P. Profit sharing in the United States. New England Magazine, 

September, 1892, n. s. vol. 7: 120-128. 
Jenks, J. W. Railway profit sharing. Charities Review, May, 1892, vol. 1: 

299-303. 

1893. Theory and practice of profit sharing. Catholic World, October, 1893, vol. 58: 
111-116. 

1894. Ehrich, Louis R. Stock sharing as a preventive of labor troubles. Forum, 

December, 1894, vol. 18: 433-438. [Profit sharing.] Public Opinion, 1894, 
vol. 17: 86; 97; 367; 573. 

1895. Blackmar, F. W. Two examples of successful profit sharing. Forum, March, 

1895, vol. 19: 57-67.- 
Procter & Gamble, Ivorydale, Ohio. 
N. O. Nelson Manufacturing Co., St. Louis, Mo. 
Proctor, William C. Does profit sharing pay? Our Day, June, 1895, vol. 14: 
317-320. 

An experiment in profit sharing. Independent Magazine, May 2, 1895, 

vol.47: 7-8. 

Account of Procter & Gamble's successful experience. 

1896. Experience with profit sharing. American Architect and Building News, 

January 18, 1896, vol. 51: 28-29. 

Gladden, Washington. Profit sharing. Lend a Hand, June, 1896, vol. 16: 
407-415. 

(Procter & Gamble Co.) 

Howorth, I. W. Profit sharing at Ivorydale. American Journal of Sociology, 
July, 1896, vol. 2: 43-57. 

Mather, F. G. Both sides of profit sharing. Popular Science Monthly, Janu- 
ary, 1896, vol. 48: 401-406. 

Monroe, Paul. Profit sharing in the L T nited States. American Journal of 
Sociology, May, 1896, vol. 1: 685-709. 

1898. Parker, Jane M. Profit sharing and domestic service as discussed at a woman's 

club. North American Review, May, 1898, vol. 166: 639-640. 

1899. Halsey, F. A. The premium plan criticised. American Machinist, June 22, 

1899, vol. 22: 556-559. 
Monroe, P. Profit sharing and cooperation. American Journal of Sociology, 

March-May, 1899, vol. 4: 593-602; 788-806. 
Premium plan and profit sharing. American Machinist, June 29, 1899, vol. 22: 

576. 

1900. Katscher, Leopold. Is profit sharing justifiable? Catholic World, May, 1900, 

vol. 71: 225-232. 

1901. Phillips, R. E. Sharing prosperity. World's Work, May, 1901, vol. 2: 761-763. 

1902. Armstrong, H. E. Profit sharing in America. Ainslee's Magazine, February, 

1902, vol. 9: 20-28. ' 

Cabot, S. Instance of profit sharing. American Review of Reviews, Sep- 
tember, 1902, vol. 26: 325-326. 

Gantt, H. L. The bonus system of rewarding labor. American Review of 
Reviews, September, 1902,* vol. 26: 326-328. 



PROFIT SHAKING IN THE UNITED STATES. 179 

1902. Mathieson, George. Some aspects of profit sharing. Economic Review, 

January 15, 1902, vol. 12: 35-42. General treatise on the subject. 

Purves, A. Harmonizing labor and capital by means of industrial partner- 
ship. American Academy of Political and Social Science. Annals, July, 1902, 
vol. 20: 61-77. 

Waldo, F. L. What employers say of it. (Profit sharing.) World's Work, 
December, 1902, vol. 5: 2853-2855. 

1903. Carnegie, A. Labor partnership and profit sharing. Cassier's Magazine, July, 

1903, vol. 24: 183-193. (U. S. Steel Corporation.) 

Employees as partners. Harper's Weekly, Mar. 7, 1903, vol. 47: 403-404. 
(U. S. Steel Corporation.) 

Falconer, Kenneth. Profit sharing and the premium plan. Cassier's Magazine, 
December, 1903, vol. 25: 173-175. 

Freeman, Albert T. Labor system of the John B. Stetson Co. Ameri- 
can Academy of Political and Social Science. Annals, November, 1903, 

. vol. 22: 445-450. 

Goodrich, A. Steel Corporation's profit sharing plan. World's Work, Febru- 
ary, 1903, vol. 5: 3055-3058. 

Kershaw, J. B. C. The promotion of industrial efficiency and national pros- 
perity. Engineering Magazine, June-August, 1903, vol. 25 : 329-341 ; 533-538 ; 
641-646. Premium wage system as practiced in Germany, the United King- 
dom, and the United States. 

McNutt, G. L. Real profit sharing and the results; Baker Co., Independent, 
Mar. 12, 1903, vol. 55: 619-622. 

Outerb ridge, Alexander E. The premium system of wage payment. Ameri- 
can Academy of Political and Social Science. Annals, January, 1903, vol. 
21: 10-19. 

Quinn, C. H. Unique experiment in profit sharing. Outlook, Feb. 21, 1903, 
vol. 73: 451-452. Eastman Kodak Co., Rochester, N. Y. 

Wellman, W. Steel Corporation's profit-sharing plan. American Review of 
Reviews, March, 1903, vol. 27: 327-331. 

1904. Cabot, Samuel. "A seventeen-year trial of profit sharing." Journal of Social 

Science, September, 1904, No. 42: 95-97. Samuel Cabot, manufacturer of 
chemicals, Boston. 

1905. Clark, J. B. Profit sharing, old and new. Harper's Magazine, April, 1905, 

vol. 110: 772-776. 
Nelson, N. O. Profit sharing with the customer. Independent, May 25, 1905, 

vol. 58: 1179-1182. 
Parsons, F. Experiment in industrial harmony. Outlook, July 15, 1905, vol. 

80: 671-676. A Boston firm. 
Vermont Company. Outlook, Apr. 29, 1905, vol. 79: 1019-1020. 

1906. Donney, R. H. Profit sharing as a peace and profit maker. Iron Age, Mar. 

29, 1906, vol. 77: 1106-1107. Plan of the Keystone Driller Co. 

Eads, A. W. Practical cooperation at Leclaire. (Illinois.) Arena, Novem- 
ber, 1906, vol. 36: 463-480. 

Emerson, H. Shop betterment and the individual effort of profit sharing. 
Engineering Magazine, March, 1906, vol. 30: 898-900. 

Nelson, N. 0. Profit sharing in practice. American Review of Reviews, 
December, 1906, vol. 34: 728-730. 

1908. Profit sharing and strikes. Outlook, Nov. 21, 1908, vol. 90: 604-605. 
Successful plan of the United States Steel Corporation. Harper's Weekly, Feb . 

8, 1908, vol. 52: 5. 

1909. Carnegie, Andrew. Future of labor. American Academy of Political and 

Social Science. Annals, March, 1909, vol. 33: 239-245. 



180 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

1909. Carnegie, Andrew. How labor will absorb capital. World's Work, January, 

1909, vol. 17: 11124-11128. 

Cooperation of the employer and employed as a solution of socialism and the 

labor problem. Craftsman, February, 1909, vol. 15: 618-622. 
Crane, R. T. Profit sharing. Iron Age, April 22, 1909, vol. 83: 1270-1272. 

Two papers read at the New York meeting of the National Metal Trades 

Association, by R. T. Crane and N. O. Nelson. 
Perkins, George W. Profit sharing, benefits, pensions. Iron Age, Dec. 2, 1909, 

vol. 84: 1704-1705. International Harvester Co. 
Nelson, N. O. My business life. World's Work, December, 1909-January, 

1910, vol. 19: 12387-12393, 12504-12511. "How I came through my own 
experience to believe in profit sharing." 

Tolman, W. H. Prosperity sharing. Century Magazine, March, 1909. vol. 77: 
795-797. 

1911. Boutell, A. A. Profit sharing in Detroit. Human Engineering, January, 1911, 

vol. 1: 20. Detroit Graphite Co. 
Brewster, Chauncey B. Industrial war or peace. Independent, July 13, 1911, 

vol. 71: 75-78. 
Fitch, John A. New profit sharing plan. Survey, April 1, 1911, vol. 26 : 30-31. 
Giving the corporation a soul. Current Literature, October, 1911, vol. 51: 

460-462. 
Kellogg, Paul U. Pioneering by employers. Survey, Aug. 19, 1911, vol. 26: 

712-717. 
Lupke, P. Master and men. Survey, Aug. 19, 1911, vol. 26: 717-719. 
Nelson, N. O. Profit sharing. Independent, Oct. 19, 1911, vol. 71: 858-860. 
Perkins, G. W. Practical profit sharing and its moral. World's Work, July, 

1911, vol. 22: 14619-14625. International Harvester Co. 

Schmidlapp, Jacob G. Profit sharing, pension, and annuity funds. Editorial 
Review, August, 1911, vol. 5: 749-754. Union Savings Bank & Trust Co., 
Cincinnati, Ohio. 

Social program of the National Electric Light Association. Survey, Aug. 19, 
1911, vol. 26: 730-734. 

1912. Fitch, John A. The United States Steel Corporation and labor. American 

Academy of Political and Social Science. Annals, July, 1912, vol. 42: 10-19. 

Foerster, Robert F. Promising venture in industrial partnership. American 
Academy of Political and Social Science. Annals, November, 1912, vol. 44: 
97-103. Discussion of scheme of the Dennison Manufacturing Co. 

Profit sharing and small business. American Review of Reviews, April, 1912, 
vol. 45: 502-503. 

Profit sharing in a Wisconsin plant. Iron Age, July 18, 1912, vol. 90: 128-129. 
Stock distribution plan of the Baker Manufacturing Co. 

Williams, A. Industrial peace activities of the National Electric Light Asso- 
ciation. American Academy of Political and Social Science. Annals, 
November, 1912, vol. 44: 94-96. 

Wuest, R. Industrial betterment activities of the National Metal Trade 
Association. American Academy of Political and Social Science. Annals, 
November, 1912, vol. 44: 74-85. Profit sharing, pp. 79-80. 

1913. Church, A. Hamilton. Bonus systems and the expense burden. Engineering 

Magazine, November, 1913, vol. 46: 207-216. General treatment of the 

subject. 
Premium piecework and the expense burden. Engineering Magazine, 

October, 1913, vol. 41: 7-18. 
Eliot, Charles W. Successful profit sharing. System, August, 1913, vol. 24: 

13&-145. Simplex Wire & Cable Co. 



PROFIT SHARING IN THE UNITED STATES. 181 

1913. Ham, W. F. Profit-sharing plan of the Washington Railway & Electric Co! 

Electric Railway Journal, Oct. 16, 1913, vol. 42: 814-815. 

How profit sharing in steel has resulted. Literary Digest, Dec. 6, 1913, vol. 47: 
1140. 

Nelson, John. Bonus and rating for works executives. Iron Age, May 15, 1913, 
vol. 91: 1159-1162. Royal Type Writer Co., Hartford, Conn. 

Perkins, George W. Let workers share in profits. American Employer, Octo- 
ber, 1913, vol. 2: 149-152. 

■ Square Deal, Battle Creek, Mich., August, 1913, vol. 13: 7-11. 

Post, C. W. A peaceful industrial family. Square Deal, Battle Creek, Mich., 
July, 1913, vol. 12: 495-506. 

Profit sharing. American Machinist, May 1, 1913, vol. 38: 749-750. 

Profit sharing by the Washington Railway & Electric Co. Electric Railway 
Journal. Jan. 11, 1913, vol. 41: 87. 

Profit sharing in big business. Literary Digest, Nov. 22, 1913, vol. 47 : 1027. r 

Stock distribution to employees. Square Deal, Battle Creek, Mich., June, 

1913, vol. 12: 417-419. Spirella Co., Midvale, Penn. 

Yarros, V. S. Social Science and what labor wants. American Journal of 

Sociology, November, 1913, vol. 19: 308-322. 
Youngstown Sheet & Tube Co.'s plan of distributing a surplus. Iron Age, Nov. 

13, 1913, vol. 92: 1115. 

1914. Abell, O. J. Labor classified on a skill wages basis by the Ford Motor Co. 

Iron Age, Jan. 1, 1914, vol. 93: 48-51. 

Scientific American Supplement, Feb. 7, 1914, vol. 7: 86-88. 

Account of the first year's operation of the Ford profit sharing plan. Detroit 

News for Tuesday, Nov. 24, 1914. 
Arnold, H. L. Ford methods and the Ford shops. Engineering Magazine. 

April-October, December, 1914, vol. 47: 1-26; 179-203; 331-358; 507-532. 

667-692; 857-886; vol. 48: 33-60; 338-366. 
Babson, Roger W. Real profit sharing; next step forward in the labor world. 

Square Deal, Battle Creek, Mich., August-October, 1914, vol. 15: 71-74; 

129-132; 251-256. 
Benson, Allen L: The bombshell that Henry Ford fired. Pearson's Magazine, 

April, 1914, vol. 31: 403-413. 
Buckley, E. J. Is a profit sharer always a partner? Metal Worker, Dec. 18, 

1914, vol. 82: 803. 

Clipper profit sharing plan nearly doubles both production and wages. Auto- 
mobile, June 4, 1914, vol. 30: 1171-1173. 

Dividing the profits — the Ford way. Square Deal, Battle Creek, Mich., 
February, 1914, vol. 14: 13-15. 

Fitch, John A. Ford of Detroit and his ten-million-doilar-profit-sharing plan. 
Survey, Feb. 7, 1914, vol. 31: 545-550. 

Ford melon for labor. Literary Digest, Jan. 17, 1914, vol. 48: 95-96. 

Ford plan for employees' betterment. Iron Age, Jan. 29, 1914, vol. 93: 306-309. 

Fuessle, Newton A. Henry Ford, a traitor to his class. American photo- 
engraver, February, 1914, vol. 6: 71-75. 

Garrett, G. Henry Ford's experiment in good will. Everybody's, April, 1914, 
• vol. 30: 462-474. 

Henry Ford and profit sharing. Outlook, Jan. 17, 1914, vol. 106: 105, 106. 

Lee, J. R. Bank accounts of Ford employees gain 30 per cent in 6£ months. 
Automobile, Oct. 8, 1914, vol. 31: 683-685. 

Louis, G. L. Paying more than wages; which profit-sharing system to use and 
why. System, June, 1914, vol. 25: 604-609. 

Millions of profits to employees. Independent, Jan. 19, 1914, vol. 77: S3. 



182 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

1914. Nathan. Jacob. Where men are made to appreciate their own work. Square 

Deal, Battle Creek, Mich., March, 1914, vol. 14: 147, 148. Ford Motor Co. 

and J. E. Bolles Iron Works, Detroit. 
Nelson, N. O. Leclaire— an existing city of the future. Independent, Jan. 19, 

1914, vol. 77: 100. 
Probing the Ford labor melon. Literary Digest, Jan. 24, 1914, vol. 48: 143. 
Profit sharing. A discussion of the Ford plan; (1) its defects, by G. M. Verity; 

(2) its merits, by L. F. Abbott. Outlook, Mar. 21, 1914, vol. 106: 627-631. 
Profit sharing as an investment. Industrial Engineering. May, 1914, vol. 14: 

207. Clipper Belt Lacer Co., Grand Rapids, Mich. 
Profit sharing or largesse? Nation, Jan. 15, 1914, vol. 98: 51-52. The Ford 

plan. 
Profit sharing plan of the Farr Alpaca Co., Holyoke, Mass. Iron Age, Feb. 12, 

1914, vol. 93: 452. 
Profit-sharing scheme of a Cleveland firm. (W. S . Tyler Co. ) Survev, Oct. 10, 

1914, vol. 33: 50. 
Rankin, J. R. Profit sharing for savings; W. C. Proctor's successful plan. 

World's Work, July, 1914, vol. 28: 316-320. 
Rockwell, T. S. Payroll partners. System, December. 1914, vol. 26: 624-629. 
Rumely, E. A. Mr. Ford's plan to share profits. World's Work, April, 1914, 

vol. 27: 664-669. 
Sensationalism in profit sharing. Living Age, Feb. 28, 1914, vol. 280; 568-571. 

The Ford plan. 

Spectator, Jan. 17, 1914, vol. 112: 83-84. 

Slauson, H. W. Ten-million-dollar efficiency plan. Machinerv, October, 

1914, vol. 21: 83-87. 

Spence, J. C. How may we and our men earn more money? Industrial En- 
gineering, June, 1914, vol. 14: 239-241. 

Successful profit sharing; plan of the Clipper Belt Lacer Co. Grand Rapids, 
Mich. Iron Age, May 7, 1914, vol. 93: 1133. 

Metal Worker, June 26, 1914, vol. 81: 356. 

Todd, Frederick. Trading profits for brains. World's Work, August, 1914, 
vol. 28: 461-466. United States Rubber Co. 

Two experiences in profit sharing. American Industries, May, 1914, vol. 14: 
20. Proctor & Gamble and the Clipper Belt Lacer Co. 

Square Deal, Battle Creek, Mich., June, 1914, vol. 14: 415, 416. 

Verity, G. M. Profit sharing in operation. Outlook, May 16, 1914, vol. 107: 
123-126. American Rolling Mill Co. 
1915. Abell, O. J. The making of men, motor cars, and profits. Iron Age, Jan. 7, 

1915, vol. 95: 33-41. 

A year of profit sharing at the plant of the Ford Motor Co. Hardware Age, 

Jan. 14, 1915, vol. 95: 48-52. 

Benson, Allen L. What Ford wages have done. Pearson's Magazine, March, 

1915, vol. 33: 259-268. 
Beringer, P. N. Profit sharing in theory and practice. American Industries, 

July, 1915, vol. 15: 11-12. "Why should not workers share losses as well as 

profits?" 
Buckley, E. J. Danger from giving employee stock in one's business. National 

Laundry Journal, Sept. 1, 1915, vol. 74: 50. 

Hardware Age, Sept. 16, 1915, vol. 96:„47. 

Cardullo, Forrest E. Industrial betterment, A study of safety and welfare 

work in manufacturing and selling organizations. Machinery, November ; 

1915, vol. 22: 171-201. 
Dewhiirst, M. Something better than philanthropy. Outlook, Sept. 1, 1915, 

vol. 111:48-51. Profit sharing scheme of the Dennison Manufacturing Co. 



PEOFIT SHAKING IN THE UNITED STATES. 183 

1915. Dunn, Harry H. Fifty shops given to clerks. Technical World Magazine, 

June, 1915, vol. 23 : 444-448. N. O. Nelson, New Orleans. 
Farrell, J. A. Profit sharing. When? Why? How? System, March, 1916, 

vol. 29 : 227-232. 
Ford, Henry. Paying $5 a clay; a year's experience. Survey, Mar. 20, 1915, 

vol. 33 : 673-674. 
Fisher, Boyd. Employers and profit sharing. Journal of the Efficiency So- 
ciety, March, 1915, vol. 4 : 2-12. 
Ford, Henry. Profit-sharing plan explained to the Federal Commission on 

Industrial Relations. Iron Trade Review, Jan. 28, 1915, vol. 56 : 234-235. 
Gaunt, Ernest H. Profit sharing not a dream. Steam Shovel and Dredge, 

February, 1915, vol. 19 : 131-133. 

Outlook, Dec. 30, 1914, vol. 108: 1016-1018. 

Giving away $10,000,000 every year. Literary Digest, Mar. 6, 1915, vol . 50 : 498. 
Gorgan, John B. The triumph of Henry Ford's ideals. National Magazine, 

January, 1915, vol. 41 : 623-632. 
Investigation and analysis of profit-sharing plans. Efficiency Magazine, March, 

1915, vol. 5 : 1, 2, 15. Concerning the Babson conference. 
King, C. P. Washington Railway & Electric Co.'s profit-sharing checks. 

Electric Railway Journal, Jan. 16, 1915, vol. 45 : 157-158. 
McCubbin, T. P. Profit sharing. Industrial Outlook, April, 1915, vol. 2 : 16-18. 
Nelson, N. O. Why I share my profits. System, October, 1915, vol. 28: 

338-344. 
Pfahler, A. E. Profit sharing as an influence in industrial relations. American 

Academy of Political and Social Science. Annals, May, 1915, vol. 59 : 

200-208. 
Pittsburg Coal employees stock investment plan working well. Coal Trade 

Bulletin, Nov. 15, 1915, vol. 3.3 : 25-26. 
Profit sharing. Motorman and Conductor, June, 1915, vol. 23 : 3-5. 

Tile Layers' Journal, September, 1915, vol. 15 : 3-5. 

Profit sharing as a booster for cooperation. Dodge Idea, June, 1915, vol. 31 : 229. 
Profit sharing as a means of enlisting better cooperation. Dodge Idea, Feb- 
ruary, 1915, vol. 31 : 69, 81. 
The share of labor from what is produced in industry in the United States. 

Economic World, July 17, 1915, vol. 96 : 77-79. 
Sharing the profits with factory employees. Dodge Idea, April, 1915, vol. 31: 

152, 164. 
Sharing the day's profits — some plans and results. Dodge Idea, December, 

1915, vol. 31 : 471, 484-485. 
Tarbell, I. M. Experiments in justice. American Magazine, March, 1915, 

vol. 79 : 37-41. 
Model industrial village in Illinois town. Metal Worker, Mar. 19, 1915, 

vol. 83:409. 
Trowbridge, Aura E. Making principal employees partners in business. 

Dodge Idea, September, 1915, vol. 31 : 341. 
Views of industrial employees. American Review of Reviews, October, 1915, 

vol. 52 : 495-496. 
Ways to share profits. System, October, 1915, vol. 28 : 344-350. 
What the men are thinking. System, September, 1915, vol. 28 : 230-237. 
Whitehead, H. Making the workmen happy. Domestic Engineering, July 

10, 1915, vol. 72 : 33-34. 

1916. An arraignment of the so-called profit-sharing system. Union Leader, Chicago, 

July 22, 1916, vol. 17:1-2. 
Coffey, Morris. Sharing the profits in a furniture factory. Wood-worker, 
January, 1916, vol. 34 : 32-33. 



184 BULLETIN OF THE BUBEATJ OF LABOR STATISTICS. 

1916. Fisher, Boyd. Where profit sharing fails and where it succeeds. The first of 

two articles based on an expert's analj-ais of 125 profit-sharing plans. System, 

March, 1916, vol. 29 : 233-239. Includes a model profit sharing plan. 
; Where profit sharing fails and where it succeeds. System, April, 1916, 

■vol. 29 : 379-386. 
Guck, H. A. Front sharing in lead and copper mining. Engineering and 

Mining Journal, Apr. 1, 1916, vol. 101: 612-613. 
Marsh, A. R. Economic and other difficulties with profit sharing. Economic 

World, Apr. 29, 1916, n. s. vol. 11 : 557-558. 
A model profit-sharing plan. System, April, 1916, vol. 29 : 386-387. 
Perkins, George W. The worker's fair share. Economic World, Feb. 12, 1916, 

vol. 11: 209-212. 
Profit sharing. 100 per cent Efficiency, August, 1916, vol. 7 : 98, 100. 
Profit-sharing system, Cleveland Twist Drill Co. Machinery, February, 1916, 

vol. 22: 505. 
Profit sharing in American industrial concerns. Economic World, Feb. 12, 

1916, n. s. vol. 11: 201-202. 
Profit sharing in the United States. Economic World, Mar. 25, 1916, n. s. vol. 

11 : 403-405. 
Sears, Roebuck profit-sharing plan. Survey, July 22, 1916, vol. 36 : 426-437. 
The Stetson strike and profit sharing. American Federationist, May, 1916, vol. 

23 : 383-385. 
Washington Railway & Electric Co.'s employees receive bonus. Electric 

Railway Journal, Jan. 8, 1916, vol. 47 : 74. 

PROFIT SHARING IN FOREIGN COUNTRIES. 

BOOKS AND PAMPHLETS. 

Auerbach , Felix. The Zeiss works and the Carl Zeiss stiftung in Jena; their scientific, 
technical and sociological development and importance. Translated from the 2d 
German edition. London, Marshall [1904J. 146 pp. 

Aves, Ernest. Cooperative industry. 1 London, Methuen, 1907. 310 pp. 

Boien, George L. Getting a living. 1 New York, Macmillan, 1903. Profit sharing. 
pp. 97-122. 

Bolton, Sarah K. Social studies in England. Boston, Lothrop [1900]. 206 pp. 
Profit sharing with employees, pp. 167-174. 

Bushill, T. W. Profit sharing and the labour question. London, Methuen, 1893. 
262 pp. 

Cadbury, Edward. Experiments in industrial organization. 1 London, Longmans, 
1912. Chap. 5: Methods of remuneration, pp. 140-199. 

( alkins, Mary W. Sharing the profits. 1 Boston, Ginn, 1888. 70 pp. 

Carpenter, Charles C. Copartnership in industry. With an appendix comprising 
chronological notes on British profit sharing and copartnership, 1829-1912. Lon- 
don, Copartnership publishers, ltd., 1912. 28 pp. 

2d edition. 1914. 62 pp. 

Industrial copartnership. London, Copartnership Publishing Co., 1914. 51 pp. 



Cooperative Congress. Annual cooperative congress, 1st, 1889 to date. Manchester. 

England, 1890 to date. 
Donisthorpe, Wordsworth. Labour capitalization. London, Harmsworth, 1887, 

218 pp. 
Egerton, Hugh E. Profit sharing. (In Palgrave, R. H. I., editor. Dictionary of 

Political Economy. Vol. 3, pp. 225-227. London, 1901.) 
Emerson, Harrington. Comparative study of wage and bonus systems. 1 New York. 

The Emerson Co. [1912]. 27 pp. 

1 General treatises on profit sharing, without reference to specific country or individual plan. 



PKOFIT SHARING IN THE UNITED STATES. 185 

Fay, Charles R. Cooperation at home and abroad; a description and an analysis, 
New York, Macmillan, 1908. 403 pp. 

Furness, Sir Christopher. Industrial peace and industrial efficiency. Proposals sub- 
mitted ... to a conference of trades-union representatives, held ... on the 
7th of October, 1908. [West Hartlepool, Sal ton, 1908.] 40 pp. Profit sharing in 
the ship-building industry in England. 

George, W. L. Labour and housing at Port Sunlight. London, Rivers, 1909. 218 
pp. Description of every phase of the prosperity sharing principle in Mr. Lever's 
model factory community and works just outside of Liverpool, England. Disad- 
vantages of profit sharing, pp. 9-17. 

Great Britain. Report (by J. Lowry Whittle) on profit sharing. London, Printed 
for H. M. Stationery office, 1891. 43 pp. (Gt. Brit. Parliament. Papers by com- 
mand, Cd. 6267.) (Accounts and papers, vol. 78.) Reprinted in United States 
Consular reports, March, 1891. Vol. 35, pp. 385-430. 

■ Board of trade. Report by Mr. D. F. Schloss on profit sharing, London, 1894. 

198 pp. (Cd. 7458.) Yearly addenda may be found in the Labour gazette, vol. 
3, 1895 to date. 

■ Profit sharing and copartnership . . . Report on profit sharing and copart- 
nership in the United Kingdom. London, 1912. 160 pp. (Cd. 6496.) Includes 
Profit sharing in private firms and companies, including opinions as to results; 
Tables of cases in which profit sharing now exists or has been abandoned ; Rates 
of bonus; Rules of various schemes; Bibliography. 

Profit-sharing system in Great Britain. (In its 15th abstract of labour sta- 



tistics of the United Kingdom. London, Wyman, 1912. pp. 134-136.) 

(In same for 1913. Vol. 16, pp. 119-122; 236-238.) 

(In same for 1914. Vol. 17, pp. 83-86; 229; 245-246.) 

Greening, E. O. Complete cooperation. (In Cooperative life. A course of lec- 
tures . . . developed at Working Men's College, London, January-March, 1889. 

London, Cooperative Printing Society, 1889. pp. 186-202.) 
Hadley, Arthur T. Economics . . . l New York, Putnam, 1896. Profit sharing, 

pp. 373-378. 
Hall, W. H. "Leclaire, " a lecture. Manchester, England, Central cooperative 

board, 1880. 17 pp. 
Hart, Mary H. Capital and labour. A brief sketch of the "Maison Leclaire" and its 

founder. London, Labour Copartnership Association, 1909. 18 pp. 

3d edition. London, 1912. 14 pp. 
Hawaiian Islands. Labor commission. Report of the labor commission on coopera- 
tion and profit sharing. Honolulu, Grieve, 1895. 68 pp. 
Holyoake, George J. Partnerships of industry; a statement of the cooperative case 

divested of sentimentality. London [Austin], 1865. 16 pp. A paper read at the 

Social Science Congress, 1865. 
Holyoake, George J. History of cooperation. London, Un win, 1906. 2 vols. Vol. 

2. Chapter 50. Copartnership with labour, pp. 661-665. 
Industrial remuneration conference, 1 London, 1885. Report of the proceedings and 

papers . . . Jan. 28-30, 1885. London, Cassell, 1885. 528 pp. 
Jones, Benjamin. Cooperative production. Oxford, Clarendon Press, 1894. Profits 

and profit sharing, pp. 782-808. 
Labour Copartnership Association, London. Publications. For list see its annual 

reports. 
Layton, W. T. The relations of capital and labour. 1 London, Collins, 1914. 264 pp. 

Sliding scales and profit sharing, pp. 172-186. 
Lever Brothers, ltd., Port Sunlight, England. Port Sunlight and prosperity sharing. 

[Port Sunlight, n. d.] 24 pp. 

i General treaties on profit sharing, without reference to specific country or individual plan. 



186 BULLETIN OF THE BUREAU OF LABOE STATISTICS. 

Lever Brothers, ltd.. Port Sunlight; a successful experiment in prosperity sharing . 

[Port Sunlight, Lever Brothers, n. d.] 36 pp. 
Livesey, Sir George T. Copartnership. London, Printed by King, Sell, and Olding, 

ltd. [1908?], 30 pp. (Paper read before the Institute of Gas Engineers, June 16, 

1908.) 
Lloyd, Henry D. Labor copartnership; notes of a visit to cooperative workshops. 

factories, and farms in Great Britain and Ireland in which employer, employe, 

and consumer share in ownership, management, and results. New York, Harper, 

1898. 351 pp. 
Loomis, F. B. Cooperation and profit sharing. (In United States Bureau of Foreign 

Commerce. Reports from the Consuls of the United States, January, 1893. Vol. 

41, pp. 21-56. Washington, 1893.) 52d Cong., 2d sess., House Mis. Doc. No. 109. 
McCabe, David A. Premium and bonus systems of payment. 1 (In his Standard 

rate in American trade-unions. Baltimore, J. H. V. press, 1912. pp. 235-41.) 
Mackmurdo, A. H. Pressing questions; profit sharing . . . x London, Lane, 1913. 

342 pp. The Magazine of Commerce. Industrial peace and industrial efficiency. 

An experiment in copartnership. London, Magazine of commerce [1908], 39 pp. 

Sir Christopher Furness's copartnership scheme. An account of the "Treaty at 

the Hartlepools. " 
Nicholson, Guy M. Profit sharing and national insurance as an aid to the solution of 

the labour question. London, King, n. d. 20 pp. (National liberal club. Po- 
litical and economic circle. Transactions, vol. 5, Part XV.) 
Pease, Edward R. Profit sharing and copartnership. London, Fabin Scoiety, 1913. 

16 pp. (Fabian tract 170.) 
Price, Langford L. F. R. Cooperation and copartnership. 1 London, Collins, cl914. 

264 pp. 
Rawson, H. G. • Profit-sharing precedents. London, Stevens, 1891. 192 pp. 
Schloss, David F. Methods of industrial remuneration. 3d edition, revised. Lon- 
don, Williams, 1898. 446 pp. 
See also Gt. Britain. Board of trade. Report by Mr. D. F. Schloss on profit 

sharing. 
Schomerus, Fr. System of employment at the Carl Zeiss works at Jena. Jena, 1910. 

24 pp. 
Shadwell, Arthur. Industrial efficiency. 1 New York, Longmans, 1906. 2 vols. 

Profit sharing. Vol. 2, pp. 136-146. 
Smith, Edward J. The new trades combination movement, its principles, methods, 

and progress. 1 London, Rivingtons, 1889. 96 pp. 
Smith, James C. Money and profit sharing; or the double standard money system. 1 

London, Paul, 1908. 232 pp. 
Stead, W. T. Profit sharing plus copartnership. (In Peters, J. P., editor. Labor 

and capital. New York, Putnam, 1902. pp. 323-329.) South Metropolitan 

Gas Co., London. 
Taussig, Frank W. Principles of economics. 1 2d edition. New York, Macmillan 

1915. 2 vols. Profit sharing. Vol. 2, pp. 303-313. 
Taylor, Sedley. Profit sharing between capital and labour. Six essays ... to 

which is added a memorandum on the industrial partnership at the Whitwood 

collieries. (1865-1874.) London, Paul, 1884. 170 pp. Discussions of historic 

profit-sharing arrangements in England and on the Continent . 
Taylor, Theodore C. Profit sharing and labour copartnership. Batley, Newsome, 

1912. 12 pp. Reprinted from the Contemporary Review, May, 1912. 
Tolman, William H. Prosperity sharing. (In Peters, J. P., editor. Labor and 

capital. New York, Putnam, 1902. pp. 309-322.) 

1 General treatises on profit sharing, without reference to specific country or individual plan. 



PROFIT SHAKING IN THE UNITED STATES. 187 

U. S. Consularte, Bradford, England. Report on a profit-sharing plan. J. T. and J. 
Taylor, ltd., Batley. [Bradford, England, 1912]. 17 typewritten leaves. 

Vivian, Henry. Copartnership in practice. London, Labour Copartnership Asso- 
ciation, [1912]. 18 pp. 

Revised and brought up to date. May, 1914. London, 1914. 18 pp. 

Whittle, J. Lowry. See Great Britain. Board of trade. Report (by J. Lowry 
Whittle) on profit sharing. . . 1891. 

Williams, Aneurin. Labour copartnership and the aspirations -of labour. 1 Letch- 
worth, Garden City press, ltd., 190-? 11 pp. 

■ Labour copartnership. Its theory and practice. 1 London, Copartnership Asso- 
ciation, 1903. 14 pp. 

ARTICLES IN PERIODICALS. 

1867. Godkin, E. L. Wages against cooperation. Nation, Aug. 8, 1867, vol. 5: 
111-112. 

1882. Taylor, Sedley. Profit sharing in agriculture. Nineteenth Century, October, 
1882, vol. 12: 583-590. 

1891. Bushill, T. W., and Schloss, D. F. List of British profit-sharing firms. Eco- 
nomic Review, January, 1891, vol. 1: 92-96. 
Grey, Albert. Profit sharing in agriculture. Journal of Royal Agricultural 

Society, December, 1891, 3d ser., vol. 2: 771-793. 
Whittle, J. L. Profit sharing. Lend a Hand, July, 1891, vol. 7: 15-24. Ex- 
tracts from Board of Trade Report by J. L. Whittle— Cd. 6267. 

1893. Moffat, Warneford. Profit sharing and cooperation. (Pottery trade.) Eco- 
nomic Review, April, 1893, vol. 3: 247-250. 

1899. Successful profit sharing. (South Metropolitan Gas Co., London.) Economic 

Journal, 1899, vol. 9: 585-588. 

1900. Phillips, Lawrence. Two profit-sharing concerns. Economic Review, April, 

1900, vol. 10: 239-241. 

1902. Holyoake, George J. Higher cooperation; its inner history. Fortnightly 

Review, January, 1902, n. s. vol. 71: 81-101. 
Ludlow, J. M. An industrial partnership. Economic Review, April, 1902, 
vol. 12: 218-219. 

1903. Middleton, M. W. Profit-sharing experiments. Economic Review, April, 

1903, vol. 13: 213-215. 
Street railway profit sharing. Current Literature, January, 1903, vol. 34: 88. 
British Columbia Electric Railway Co., London. 
1905. Profit sharing and copartnership. Quarterly Review, January, 1905, vol. 202: 

61-87. 
1909. Spiller, Gustav. A method of dealing with the labor problem. International 

Journal of Ethics, Apr. 6, 1909, pp. 358-367. Zeiss Optical works at Jena. 
1912. Bartholeyns, A. O'D. Profit sharing between capital and labour. Westmin- 
ster Review, May, 1912, vol. 177: 493-500. 

Bremner, C. S. Profit-sharing experiment; how Monsieur Godin tried to 
socialize his stove foundry. Harper's Weekly, Oct. 19, 1912, vol. 56: 12. 

Fay, C. R. Copartnership in industry. Economic Journal, December, 1912 
vol. 22: 529-541. 

Harrison, Fairfax. A plan for industrial cooperation. Basing wages of rail- 
way employees on gross earnings proposed as a substitute for present means 
of settlement. Railway Age Gazette, Nov. 22, 1912, vol. 53: 987-989. 

Jones, G. Labour unrest; its cure. Westminster Review, November, 1912, 
vol. 178: 503-508. 

i General treatises on profit sharing, without reference to specific country or individual plan. 

Note.— General publications dealing with profit sharing both in this country and abroad, have been 
included in the United States list. 



188 BULLETIN OF THE BUREAU OF LABOR STATISTICS. 

1912. Kershaw, John B. C. Copartnership and profit sharing as a solution for the 

wages problem. Engineering Magazine, September, 1912, vol. 43: 837-845. 
McDermott, Frederick. British railways and profit sharing. Railway News, 

July 13, 1912, vol. 98: 143-148. 
Stocks, J. Profit sharing in operation. Economic Review, July, 1912, vol. 

22: 313-317. 
Taylor, Theodore 0. Profit sharing and labour copartnership. Contemporary 

Review, May, 1912, vol. 101: 625-634. 
Wolmer, Viscount. Copartnership and industrial unrest. National Review, 

May, 1912, vol. 59: 524-537. 

1913. Ashley, W. J. Profit sharing. Quarterly Review, October, 1913, vol. 219: 

509-530. 
Furness, H. S. Copartnership and labour unrest. Economic Review, January, 

1913, vol. 23: 61-72. 
Kershaw, J. B. C. Future relations of capital and labor. Fortnightly Review, 

December, 1913, vol. 100: 1145-1163. 
Lester-Garland, L. V. Copartnership and labour. Economic Review, April, 

1913, vol. 23: 150-157. 
Smith, James C, Theory of equitable profit sharing. Westminster Review, 

November, 1913, vol. 180: 492-512. 

1914. Profit sharing and labor copartnership. Metal Worker, June 19, 1914, vol. 81: 

822. 

Cooperative production and profit sharing. New Statesman. Special Supple- 
ment, Feb. 14, 1914, 32 pp. Draft of 1st report of the committee of the 
Fabian Research Department in its investigation of " The control of industry. " 
Submitted by Sidney and Beatrice Webb. Deals with the question, "Can 
the organization of industry be based exclusively on associations of pro- 
ducers. " 

Loop, Carl R. Profit sharing in the United Kingdom. U. S. Daily .Consular 
and Trade Reports, Oct. 22, 1914, 17th year, No. 248, p. 397. 

Profit sharing and copartnership abroad. Iron and Coal Trades Review, Mar. 
20, 1914, vol. 88: 428. 

1915. English railway men's war bonus. Railway Age Gazette, Nov. 12, 1915, vol. 

60: 899. 
Profit sharing in the United Kingdom, 1914-1915. Great Britain. Board of 
Trade. Labour Gazette, November, 1915, vol. 23: 394. 
For list of publications in foreign languages, consult — ■ 
International cooperative alliance. International cooperative bibliography. Lon- 
don, King, 1906. 

Profit sharing and labour copartnership, pp. 140-150. Arranged by country, 
including publications on profit sharing in Germany, France, Austria, Belgium, 
Denmark, Italy, Netherlands, the United Kingdom, and Switzerland, in addi- 
tion to general works on the subject. 
Great Britain. Board of trade. Report on profit sharing and labour copartnership 
abroad . . . 1914. List of publications in the library of the Department of 
Labour dealing with profit sharing and labour copartnership, pp. 149-157. 
Includes " Foreign countries. " 
Bibliographie der Sozialwissenschaften. 1., jahrgang, 1905 to date. Dresden, Boh- 
mert, 1906 to date. Semimonthly. 



SERIES OF BULLETINS PUBLISHED BY THE BUREAU OF LABOR STATISTICS. 

[The publication of the Annual and Special Reports and of the bimonthly Bulletin has 
been discontinued, and since July, 1912, a Bulletin has been published at irregular intervals. 
Each number contains matter devoted to one of a series of general subjects. These Bulle- 
tins are numbered consecutively in each series and also carry a consecutive whole number, 
beginning with No. 101. A list of the series, together with the individual Bulletins falling 
under each, is given below. A list of the Reports and Bulletins of the Bureau issued prior 
to July 1, 1912, will be furnished on application.) 

Wholesale Prices. 

No. 1. Wholesale prices, 1890 to 1912. (Bui. 114.) 
No. 2. Wholesale prices, 1890 to 1913. (Bui. 149.) 

No. 3. Index numbers of wholesale prices in the United States and foreign countries. (Bui. 173.) 
No. 4. Wholesale prices, 1890 to 1914. (Bui. 181.) 
No. 5. Wholesale prices, 1890 to 1915. (Bui. 200.) 
Retail Prices and Cost of Living. 

No. 1. Retail prices, 1S90 to 1911: Part I. (Bui. 105: Part I.) 

Retail prices, 1890 to 1911: Part II— General tables. (Bui. 105: Part II.) 
No. 2. Retail prices, 1890 to June, 1912: Part I. (Bui. 106: Part I.) 

Retail prices, 1890 to June, 1912: Part II— General tables. (Bui. 100: Part II.) 
No. 3. Retail prices, 1890 to August, 1912. (Bui. 108.) 
No. 4. Retail prices, 1S90 to October, 1912. (Bui. 110.) 
]SJo. 5. Retail prices, 1S90 to December, 1912. (Bui. 113.) 
No. 6. Retail prices, 1890 to February, 1913. (Bui. 115.) 
No. 7. Sugar prices, from refiner to consumer. (Bui. 121.) 
No. 8. Retail prices, 1890 to April, 1913. (Bui. 125.) 
No. 9. Wheat and flour prices, from farmer to consumer. (Bui. 130.) 
No. 10. Retail prices, 1890 to June, 1913. (Bui. 132.) 
No. 11. Retail prices, 1890 to August, 1913. (Bui. 136.) 
No. 12. Retail prices, 1890 to October, 1913. (Bui. 138.) 
No. 13. Retail prices, 1890 to December, 1913. (Bui. 140.) 
No. 14. Retail prices, 1907 to December, 1914. (Bui. 156.) 
No. 15. Butter prices, from producer to consumer. (Bui. 164.) 
No. 16. Retail prices, 1907 to June, 1915. (Bui. 184.) 
No. 17r Retail prices, 1907 to December, 1915. (Bui. 197.) 

Wages and Hours of Labor. 

No. 1. Wagesand hours oflabor in the cotton, woolen, and silk industries, 1890 to 1912. (Bui. 128.) 
No. 2. Wages and hours of labor in the lumber, mill work, and furniture industries, 1S90 to 1912 (BuL 

129.) 
No. 3. Union scale of wages and hours of labor, 1907 to 1912. (Bui. 131.) 
No. 4. Wages and hours of labor in the boot and shoe and hosiery and knit goods industries, 1S90 to 

1912. (Bui. 134.) 

No. 5. Wages and hours of labor in the cigar and clothing industries, 1911 and 1912. ( Bui. 135.) 
No/ 6. Wages and hours of labor in the building and repairing of steam railroad cors, 1890 to 1912. 

(Bui. 137.) 
No. 7. Union scale of wages and hours of labor, May 15, 1913. (Bui. 143.) 
No. 8. Wages and regularity of employment in the dress and waist industry of New York City. (Bui. 

146.) 
No. 9. Wages and regularity of employment in the cloak, suit, and skirt industry. (Bui. 147.) 
No. 10. Wages and hours of labor in the cotton, woolen, and silk industries, 1907 to 1913. (BUl. 150.) 
No. 11. Wages and hours of labor in the iron and steel industry in the United States, 1907 to 1912. 

(Bui. 151.) 
No. 12. Wages and hours of labor in the lumber, millwork, and furniture industries, 1907 to 1913. 

(Bui. 153.) 
No. 13. Wages and hours of labor in the boot and shoe and hosiery and underwear industries, 1907 to 

1913. (Bui. 154.) 

No. 14. Wages and hours oflabor in the clothing and cigar industries, 1911 to 1913. (Bui. 101.) 

No. 15. Wages and hours of labor in the building and repairing of steam railroad cars, 1907 to 1913. 

(Bui. 163.) 
No. 16. Wages and hours of labor in the iron and steel industry, 1907 to 1913. (Bui. 168.) 
No. 17. Union scale of wages and hours of labor, May 1, 1914. (Bui. 171.) 

No. 18. Wages and hours oflabor in the hosiery and underwear industry, 1907 to 1914. (Bui. 177.) 
No. 19. Wages and hours oflabor in the boot and shoe industry, 1907 to 1914. ( Bui. 178.) 
No. 20. Wages and hours of labor in the men's clothing industry, 1911 to 1914. (Bui. 187.) 
No. 21. Wages and hours oflabor in the cotton, woolen, and silk industries, 1907 to 1914. (Bui. 190.) 
No. 22. Union scale of wages and hours of labor, May 1, 1915. (Bui. 194.) 
No. 23. Street railway employment in the United States. (Bui. 204.) [In press. 



n BULLETIN OF THE BUREAU OF LABOB STATISTICS. 

Employment and Unemployment. 

No. 1. Proceedings of the American Association of Public Employment Offices. (Bui. 192.) 
No. 2. Unemployment in the United States. (Bui. 195.) 
No. 3. Proceedings of Employment Managers' Conference. (Bui. 196.) 

No. 4. Proceedings of the Conference of Employment Managers' Association of Boston. (Bui. 202.) 
No. 5. The British system of labor exchanges. (Bui. 206.) 
For material relating to these subjects, but not included in this series, see Miscellaneous series, Nos. 1, 10, 
12(Buls.l09, 172, 183). 

Women in Industry. 

No. 1. Hours, earnings, and duration of employment of wage-earning women in selected industries in 

the District of Columbia. (Bui. 116.) 
No. 2. Working hours of women in the pea canneries of Wisconsin. (Bui. 119.) 
No. 3. Employment of women in power laundries in Milwaukee. (Bui. 122.) 
No. 4. Hours, earnings, and conditions of labor of women in Indiana mercantile establishments and 

garment factories. (Bui. 160.) 
No. 5. Summary of the report on condition of woman and child wage earners in the United States. 

(Bui. 175.) 
No. 6. Effect of minimum-wage determinations in Oregon. (Bui. 176.) 
No. 7. The boot and shoe industry in Massachusetts as a vocation for women. (Bui. 180.) 
No. 8. Unemployment among women in department and other retail stores of Boston, Mass. (BuL 

182.) 
No. 9. Dressmaking as a trade for women. (Bui. 193.) 
For material rolating to this subject, but not included in this series, see Miscellaneous series, Nos. 2, 
3, 8 (Buls. 117, 118, 167). 

Workmen's Insurance and Compensation (including laws relating thereto). 

No. 1. Care of tuberculous wage earners in Germany. (Bui. 101.) 
No. 2. British National Insurance Act, 1911. (Bui. 102.) 
No. 3. Sickness and accident insurance law of Switzerland. (Bui. 103.) 
No. 4. Law relating to insurance of salaried employees in Germany. (Bui. 107.) 
No. 5. Workmen's compensation laws of the United States and foreign countries. (Bui. 126.) 
No. 6. Compensation for accidents to employees of the United States. (Bui. 155.) 
No. 7. Compensation legislation of 1914 and 1915. (Bui. 185.) 

No. 8. Compensation laws of the United States and foreign countries. (Bui. 203.) [In press.] 
Industrial Accidents and Hygiene. 

No. 1. Lead poisoning in potteries, tile works, and porcelain enameled sanitary ware factories. (BuL 

104.) 
No. 2. Hygiene of thepainters' trade. (Bui. 120.) 

No. 3. Dangers to workers from dusts and fumes, and methods of protection. (Bui. 127.) 
No. 4. Lead poisoning in the smelting and refining of lead. # (Bui. 141.) 
No. 5. Industrial accident statistics. (Bui. 157.) 

No. 6. Lead poisoning in the manufacture of storage batteries. (Bui. 165.) 
No. 7. Industrial poisons used in the rubber industry. (Bui. 179.) 
No. 8. Report of British departmental committee on danger in the use of lead in the painting of 

buildings. (Bui. 188.) 
No. 9. Report of committee on statistics and compensation insurance cost of the International Asso* 

ciation of Industrial Accident Boards and Commissions. (Bui. 201.) [Limited edition.] 
No. 10. Anthrax as an occupational disease. (Bui. 205.) [In press.] 
No. 11. Causes of death by occupations. (Bui. 207.) [In press.] 

Conciliation and Arbitration (including strikes and lockouts). 

No. 1. Conciliation and arbitration in the building trades of Greater New York. (Bui. 124.) 

No. 2. Report of the industrial council of the British Board of Trade on its inquiry into industrial 

agreements. (Bui. 133.) 
No. 3. Michigan copper district strike. (Bui. 139.) 

No. 4. Industrial court of the cloak, suit, and skirt industry of New York City. (Bui. 144.) 
No. 5. Conciliation, arbitration, and sanitation in the dress and waist industry of New York City. 

(Bui. 145.) 
No. 6. Collective bargaining in the anthracite coal industry. (Bui. 191.) 
No. 7. Collective agreements in the men's clothing industry. (Bui. 198.) 






PROFIT SHARING IN" THE UNITED STATES. Ill 

Labor Laws of the "United States (including decisions of courts relating to labor). 
No. 1. Labor legislation of 1912. (Bui. 111.) 

No. 2. Decisions of courts and opinions affecting labor, 1912. (Bui. 112.) 
No. 3. Labor laws of the United States, with decisions of courts relating thereto. (Bui. 148.) 
No. 4. Decisions of courts and opinions affecting labor, 1913. (Bui. 152.) 
No. 5. Labor legislation of 1914. (Bui. 166.) 
No. 6. Decisions of courts affecting labor, 1914. (Bui. 169.) 
No. 7. Labor legislation of 1915. (Bui. 186.) 
No. 8. Decisions of courts affecting labor, 1915. (Bui. 189.) 

Foreign Labor Laws. 

No. 1. Administration of labor laws and factory inspection in certain European countries. (Bui. 
142.) 
Vocational Education. 

No. 1. Vocational education survey of Minneapolis. (Bui. 199.) 
For material relating to this subject, but not included in this series, see Wages and hours of labor series, 
No. 9 (Bui. 147); Conciliation and arbitration series, No. 5 (Bui. 145); Miscellaneous series, Nos. 6, 7 
(Buls.159, 162). 
Miscellaneous Series. 

No. 1. Statistics of unemployment and the work of employment offices. (Bui. 109.) 

No. 2. Prohibition of. night work of young persons. (Bui. 117.) 

No. 3. Ten-hour maximum working day for women and young persons. (Bui. 118.) 

No. 4. Employers' welfare work. (Bui. 123.) 

No. 5. Government aid to home owning and housing of working people in foreign countries. (Bui. 
158.) 

No. 6. Short-unit courses for wage earners and a factory school experiment. (Bui. 159.) 

No. 7. Vocational education survey of Richmond, Va. (Bui. 162.) 

No. 8. Minimum-wage legislation in the United States and foreign countries. (Bui. 167.) 

No. 9. Foreign food prices as affected by the war. (Bui. 170.) 

No. 10. Unemployment in New York City, N. Y. (Bui. 172.) 

No. 11. Subject index of the publications of the United States Bureau of Labor Statistics up to May 1, 
1915. (Bui. 174.) 

No. 12. Regularity of employment in the women's ready-to-wear garment industries. (Bui. 183.) 

O 



"^ 



VITA 

Boris Emmet was born in Duenaburg, Russia, June 16, 
1885, and received his preliminary education at home and 
in the classical gymnasium of Libau, Courland. He came 
to the United States in the fall of 1907. Entered the 
College of Letters and Science of the University of Wisconsin 
in 1909, where he graduated with the degree of Bachelor of 
Arts in 1912, and Master of Arts in 1914. During the year 
of 1914 he served as Special Agent of the United States 
Commission on Industrial Relations. Entered The Johns 
Hopkins University in 1916, taking graduate work in polit- 
ical economy, political science and history. He is at the 
present time employed as expert by the Bureau of Labor 
Statistics of the United States Department of Labor. 









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